NFIB's February jobs report indicates a rise in labor costs as a significant issue for small business owners, with 38% of them reporting unfilled job openings. This figure is an increase from January and the highest since August 2024. A net 15% of owners are planning to create new jobs in the coming three months, marking a decrease from the previous month.
"Over half of Main Street firms reported hiring or trying to hire in February, but with little success," stated Chief Economist Bill Dunkelberg. "Meanwhile, consistent compensation increases continue to put pressure on small business owners as they look for qualified workers to fill their many open positions."
The report shows that 53% of small business owners were engaged in hiring efforts during February, slightly up from January. Of those hiring or attempting to hire, 48% reported difficulties finding qualified candidates, with 27% encountering few suitable applicants and 21% finding none at all.
Job openings were most prevalent in retail, construction, and manufacturing sectors while least common in agriculture and finance. Construction sector job openings increased by one point compared to last month but decreased by seven points from the previous year.
Skilled worker positions accounted for 31% of job openings, increasing by two points, whereas unskilled labor positions rose by three points to reach 13%.
The percentage of small business owners citing labor quality as their primary operating challenge rose by one point to 19%. Labor costs were identified as the most critical problem by 12%, just below the peak level reached in December 2021. The last comparable level was observed in February 2023.
A net 33% of small business owners reported raising compensation in February, maintaining January's level. However, plans to increase compensation over the next three months dropped by two points to a net of 18%.