Thirty-seven percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down 5 points from May. Thirty-one percent have openings for skilled workers (down 6 points) and 16 percent have openings for unskilled labor (up 2 points). The difficulty in filling open positions is particularly acute in the construction, transportation, and retail sectors. Job openings in construction were down 3 points from last month and over half of the firms (51 percent) have a job opening they can’t fill. Openings were the lowest in the agriculture and finance sectors. Owners’ plans to hire were unchanged in May at a seasonally adjusted net 15 percent. Overall, 60 percent reported hiring or trying to hire in June, unchanged from May. Fifty-one percent (85 percent of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill (unchanged). Thirty-one percent of owners reported few qualified applicants for their open positions (up 2 points) and 20 percent reported none (down 2 points). Reports of labor quality as the single most important problem for business owners fell 1 point to 19 percent. Labor cost reported as the single most important problem for business owners rose 1 point to 11 percent, only 2 points below the highest reading of 13 percent reached in December 2021.

Fifty-two percent reported capital outlays in the last six months, down 6 points from May and the lowest reading since August 2022. A recovery in investment is needed to support stronger productivity, but this is unlikely to occur while interest rates remain high, and more 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, 35 percent reported spending on new equipment (down 5 points), 22 percent acquired vehicles (down 3 points), and 14 percent improved or expanded facilities (down 2 points). Ten percent spent money on new fixtures and furniture (down 1 point) and 5 percent acquired new buildings or land for expansion (down 1 point). Twenty-three percent (seasonally adjusted) plan capital outlays in the next six months, unchanged from May.

The net percent of owners raising average selling prices rose 2 points from May to a net 27 percent seasonally adjusted. Twenty-one percent of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), down 1 point from May. Unadjusted, 12 percent (unchanged) reported lower average selling prices and 41 percent (up 1 point) reported higher average prices. Price hikes were most frequent in the construction (55 percent higher, 5 percent lower), retail (49 percent higher, 8 percent lower), wholesale (46 percent higher, 17 percent lower), finance (38 percent higher, 7 percent lower), and services (37 percent higher, 9 percent lower) sectors. Seasonally adjusted, a net 26 percent plan price hikes in June (down 2 points).

Four percent of owners reported that all their borrowing needs were not satisfied, up 1 point from May and the highest reading since August 2022. Twenty-four percent reported all credit needs met (down 5 points) and 61 percent said they were not interested in a loan (up 3 points). A net 7 percent reported their last loan was harder to get than in previous attempts (up 1 point). Four percent reported that financing was their top business problem in June (down 2 points). A net 15 percent of owners reported paying a higher rate on their most recent loan, down 5 points from May. This was the lowest reading since May 2022. The average rate paid on short maturity loans was 9.5 percent, up half of a point from last month. Twenty-eight percent of all owners reported borrowing on a regular basis, down 3 points from May.

Seasonally adjusted, a net 38 percent reported raising compensation, up 1 point from May. A seasonally adjusted net 22 percent plan to raise compensation in the next three months, up 4 points from May. Eleven percent cited labor costs as their top business problem, up 1 point from May and only 2 points below the highest reading of 13 percent reached in December 2021. Nineteen percent said that labor quality was their top business problem (down 1 point), remaining behind inflation as the number one issue. The frequency of reports of positive profit trends was a net negative 29 percent (seasonally adjusted), 1 point better than May. Among owners reporting lower profits, 34 percent blamed weaker sales, 17 percent blamed the rise in the cost of materials, 12 percent cited labor costs, and 9 percent cited lower selling prices. For owners reporting higher profits, 37 percent credited sales volumes, 27 percent cited usual seasonal change, and 20 percent cited higher selling prices.

A net negative 12 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up 2 points from May, but clearly recession-level readings. The net percent of owners expecting higher real sales volumes was unchanged at a net negative 13 percent (seasonally adjusted), a recession level reading. The net percent of owners reporting inventory gains rose 4 points to a net negative 3 percent. Not seasonally adjusted, 17 percent reported increases in stocks (up 6 points) and 16 percent reported reductions (up 1 point). A net negative 2 percent (seasonally adjusted) of owners viewed current inventory stocks as “too low” in June, up 6 points. A net negative 2 percent (seasonally adjusted) of owners plan inventory investment in the coming months, up 4 points from May.