Thirty-eight percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up 1 point from June. Thirty-two percent have openings for skilled workers (up 1 point) and 16 percent have openings for unskilled labor (unchanged). The difficulty in filling open positions is particularly acute in the construction, transportation, and retail sectors. Job openings in construction were up 4 points from last month and over half of the firms (55 percent) have a job opening they can’t fill. Openings were the lowest in the agriculture and finance sectors. A seasonally adjusted net 15 percent of owners plan to create new jobs in the next three months, unchanged for the third consecutive month. Overall, 57 percent reported hiring or trying to hire in July, down 3 points from June. Forty nine percent (86 percent of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill (down 2 points). Twenty-nine percent of owners reported few qualified applicants for their open positions (down 2 points) and 20 percent reported none (unchanged). Reports of labor quality as the single most important problem for business owners were unchanged from the previous month at 19 percent. Labor cost reported as the single most important problem for business owners fell 2 points to 9 percent, 4 points below the highest reading of 13 percent reached in December 2021.

Fifty-four percent reported capital outlays in the last six months, up 2 points from June. A recovery in investment is needed to support stronger productivity, but this is unlikely to occur while interest rates remain high, and many owners anticipate slower sales. Long term, the worker shortage has given firms an incentive to invest in labor saving technology. But, overall, capital spending is sluggish and not yet back to pre-pandemic levels. Of those making expenditures, 36 percent reported spending on new equipment (up 1 point), 22 percent acquired vehicles (unchanged), and 15 percent improved or expanded facilities (up 1 point). Ten percent spent money on new fixtures and furniture (unchanged) and 7 percent acquired new buildings or land for expansion (up 2 points). Twenty-three percent (seasonally adjusted) plan capital outlays in the next six months, unchanged for the third consecutive month. A more positive view of the future economy and economic policy would help stimulate longer term investment spending, but currently owners’ views about the future are not supportive and financing costs are very high. Investment is needed to address labor supply chain problems which still persist in the current environment.

The net percent of owners raising average selling prices fell 5 points from June to a net 22 percent seasonally adjusted. Twenty-five percent of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), up 4 points from June. Unadjusted, 13 percent (up 1 point) reported lower average selling prices and 36 percent (down 5 points) reported higher average prices. Price hikes were most frequent in the finance (57 percent higher, 6 percent lower), wholesale (47 percent higher, 9 percent lower), retail (40 percent higher, 14 percent lower), and construction (38 percent higher, 7 percent lower) sectors. Seasonally adjusted, a net 24 percent plan price hikes in July (down 2 points). This is the lowest reading since April 2023.

Two percent of owners reported that all their borrowing needs were not satisfied, down 2 points from June. Twenty-five percent reported all credit needs met (up 1 point) and 62 percent said they were not interested in a loan (up 1 point). A net 6 percent reported their last loan was harder to get than in previous attempts (down 1 point). Three percent reported that financing was their top business problem in July (down 1 point). A net 15 percent of owners reported paying a higher rate on their most recent loan, unchanged from June and the lowest reading since May 2022. The average rate paid on short maturity loans was 9.4 percent, down 0.1 of a point from last month. Twenty-seven percent of all owners reported borrowing on a regular basis, down 1 point from June.

Seasonally adjusted, a net 33 percent reported raising compensation, down 5 points from June and the lowest reading since April 2021. A seasonally adjusted net 18 percent plan to raise compensation in the next three months, down 4 points from June. Nineteen percent said that labor quality was their top business problem (unchanged), remaining behind inflation as the number one issue. The frequency of reports of positive profit trends was a net negative 30 percent (seasonally adjusted), 1 point worse than June. Among owners reporting lower profits, 33 percent blamed weaker sales, 17 percent blamed the rise in the cost of materials, 11 percent cited labor costs, and 10 percent cited lower selling prices. For owners reporting higher profits, 45 percent credited sales volumes, 31 percent cited usual seasonal change, and 11 percent cited higher selling prices.

A net negative 16 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down 4 points from June. The net percent of owners expecting higher real sales volumes rose 4 points to a net negative 9 percent (seasonally adjusted), the highest reading of this year. The net percent of owners reporting inventory gains fell 6 points to a net negative 9 percent. The last time it was this low was in August 2020. Not seasonally adjusted, 11 percent reported increases in stocks (down 6 points) and 17 percent reported reductions (up 1 point). A net negative 4 percent (seasonally adjusted) of owners viewed current inventory stocks as “too low” in July, down 2 points from June. A net 2 percent (seasonally adjusted) of owners plan inventory investment in the coming months, up 4 points from June. The last time this was positive was in October 2022.