WASHINGTON, D.C. (May 14, 2024) – The Small Business Optimism Index, as reported by the National Federation of Independent Business (NFIB), saw a marginal increase of 1.2 points in April to reach 89.7. Despite this being the first rise this year, it also marks the 28th consecutive month below the half-century average of 98. A notable 22% of owners highlighted inflation as their primary business concern, a slight decrease from March but still ranking as the top issue for small businesses.
"Cost pressures remain the top issue for small business owners, including historically high levels of owners raising compensation to keep and attract employees," stated Bill Dunkelberg, NFIB Chief Economist. He further added that while these entrepreneurs continue to grapple with increasing uncertainties, they remain committed to serving their customers.
Key findings from the report include:
- An increase in the net percent of owners expecting higher real sales from March to a net negative 12% (seasonally adjusted).
- A seasonally adjusted net 12% of owners plan to create new jobs in the next three months.
- A decrease in plans for price hikes among owners to a net 26% (seasonally adjusted) in April.
- An increase in job openings that could not be filled by all owners to forty percent (seasonally adjusted).
- A drop in the net percent of owners raising average selling prices from March to a net 25% seasonally adjusted.
The monthly jobs report by NFIB indicated that 56% of owners attempted hiring in April, with a significant majority (91%) reporting few or no qualified applicants for their vacancies.
Investment activities remained consistent with March figures, with fifty-six percent of owners reporting capital outlays over the past six months. Planned capital outlays over the next few months were reported by twenty-two percent (seasonally adjusted) of business owners.
Owners reporting inventory gains saw a slight increase of one point to a net negative 6%. The net percent of owners expecting higher real sales volumes rose six points to a net negative 12% (seasonally adjusted).
The report also highlighted that thirteen percent of owners reported lower average selling prices and 41% reported higher average prices. The sectors with the most frequent price hikes were finance, retail, construction, manufacturing, and wholesale.
In terms of compensation, a net 38% reported raising compensation in April. A net 21% (seasonally adjusted) of owners plan to raise compensation in the next three months.
Labor costs were cited as the top business problem by eleven percent of owners. Nineteen percent stated that labor quality was their top business issue, ranking behind inflation.
Reports of positive profit trends remained low at a net negative 27% (seasonally adjusted). For those reporting lower profits, weaker sales and rising material costs were the main culprits. On the other hand, those with higher profits credited sales volumes and higher selling prices.
The full report can be accessed [here](url).
