Small businesses, the engine behind roughly 60 million American jobs, are pulling back on hiring at a pace not seen since the early months of the pandemic.
The latest NFIB Jobs Report shows unfilled job openings fell to 29% in May, while net hiring plans slid to just +9%, both hitting their lowest marks since May 2020.
Despite the pullback, 55% of small business owners said they either hired or attempted to hire in May, a slight uptick from the previous month. Compensation trends have remained stable, suggesting employers are trying to retain existing workers even as they hesitate to bring on new ones.
For investors, the net hiring plans at +9% are below the +11% historical average, a level that includes recessions. This indicates small businesses are less inclined to hire than typically seen across the full business cycle. The next few months of NFIB data will be critical. If unfilled openings stabilize around 29%, the May report becomes a one-month blip. If the decline continues into the low-to-mid 20s, the conversation shifts from softening to something considerably less comfortable.