The National Federation of Independent Business (NFIB) released its October survey of small business owners today. They remain pessimistic about the general business outlook. They are still struggling to find workers and to keep them. In any event, their labor costs are rising rapidly and forcing them to raise their prices. They've been sucked into the economy's wage-price spiral.
During October, 32% of small business owners said that they are planning to raise worker compensation (chart). That's up sharply from 23% during September. Also in the October NFIB survey, 34% said they are planning on raising their average selling prices.
The percentage of small business owners with job openings remained very high at 46% during October. This series is very highly correlated with the JOLTS job openings series which rose to 10.7 million (chart). This supply of jobs exceeds the demand for jobs (i.e., the number of unemployed job seekers) by 4.6 million. There are 1.8 job openings for each unemployed worker.
This is bad news for the Fed, which has been expecting that by tightening monetary conditions, inflationary pressures would ease in the labor market. Fed officials have frequently indicated that they would like to see the JOLTS job openings series drop. That's not happening as much as they would like according to the NFIB survey.
We are still 60/40 as the odds of a soft landing vs a hard landing for the economic outlook. October's NFIB small business survey is more supportive of the hard landing scenario.