The National Federation of Independent Business (NFIB) has reported a decline in its Small Business Optimism Index, which fell by 1.6 points to 95.8 in April. This marks the second consecutive month the index has been below the 51-year average of 98. The Uncertainty Index also saw a decrease, dropping four points from March to 92, though it remains significantly above the historical average of 68.
"Uncertainty continues to be a major impediment for small business owners in operating their business in April, affecting everything from hiring plans to investment decisions," said NFIB Chief Economist Bill Dunkelberg. "While owners are still trying to fill a high number of current job openings, their outlook on business conditions is less supportive of future business investments."
The report highlighted several key findings:
- The net percentage of owners expecting better business conditions fell six points from March to a net 15%, marking the lowest level since last October.
- Expectations for higher real sales volumes decreased by four points to a net negative 1%, continuing a four-month trend of declining sales expectations.
- A net negative 4% of owners plan inventory investment in the coming months, down three points from March and at its lowest point in 11 months.
- Eighteen percent plan capital outlays within six months, down three points from March, reaching levels last seen during the COVID-19 pandemic in April 2020.
Labor quality remains the top issue for small businesses for the third month in a row, with 19% citing it as their primary concern. Inflation concerns have decreased slightly but remain significant at 14%. Insurance costs have risen as an issue, with 10% now citing it as their most pressing problem.
In terms of employment, a seasonally adjusted 34% of small business owners reported unfilled job openings in April. Of those hiring or attempting to hire, 85% noted few or no qualified applicants. Despite this challenge, there was a slight increase in plans to create new jobs over the next three months.
Labor costs have become less concerning for some businesses, falling three points to represent an issue for only 8%. However, compensation changes continue with a net 33% reporting increased wages and a planned increase by another net 17%.
Capital expenditures over the past six months were reported by 58% of owners, showing a slight decline. Spending focused on new equipment (40%), vehicles (25%), and facility improvements (16%).
Sales challenges persist with poor sales cited as the top problem by nine percent for four consecutive months. Inventory levels also showed fluctuations with reductions outweighing increases.
Price adjustments are ongoing; while many report price hikes planned or implemented recently, some have reduced prices due to various market pressures.
Profit trends showed improvement with fewer reports of negative profits compared to previous months. Financing issues remained stable with only minor shifts reported regarding loan accessibility and interest rates.
Nine percent consider it an opportune time for expansion—unchanged and historically low—while taxes and government regulations continue as notable concerns among small business owners.
The NFIB Research Center's data collection spans decades through both quarterly and monthly surveys conducted among its membership base. This latest survey reflects responses gathered throughout April 2025.
