WASHINGTON – The NFIB Small Business Optimism Index rose 0.1 points in April to 95.9, below its 52-year average of 98 for the second consecutive month. The Uncertainty Index fell 4 points from March to 88, remaining well above its historical average of 68.
“Inflationary pressures continue to be a challenge for Main Street,” said Bill Dunkelberg, NFIB chief economist. “While small business optimism is currently fragile, the benefits of the Working Families Tax Cut Act should start to feed into the private sector over the next few months.”
As reported in NFIB’s monthly jobs report, the NFIB Small Business Employment Index fell 1.2 points from March to 100.4. This decline is indicative of weakening in the labor market, though the level still suggests balance.
A seasonally adjusted 34% of small business owners reported job openings they could not fill in April, up 2 points from March. Unfilled job openings remain above the historical average of 24%. Twenty-nine percent had openings for skilled workers (up 2 points), and 13% had openings for unskilled labor (up 1 point).
Looking ahead, a seasonally adjusted net 13% of owners plan to create new jobs in the next three months, up 1 point from March and close to the average of a net 11%. Overall, 53% of owners reported hiring or trying to hire in April, up 1 point from March. Forty-six percent of owners (87% of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill (up 1 point). Twenty-six percent of owners reported few qualified applicants for their open positions (up 4 points), and 20% reported none (down 3 points).
In April, 18% of small business owners cited labor quality as their single most important problem, up 3 points from March and above the historical average of 12%. Nine percent of business owners reported labor costs as their single most important problem, down 1 point from March.
A seasonally adjusted net 30% reported raising compensation, down 3 points from March. A seasonally adjusted net 18% plan to raise compensation in the next three months, unchanged from March.
Fifty-one percent of owners reported capital outlays in the past six months, unchanged from March. Actual capital expenditure levels have declined by 9 points since the beginning of this year and remain below the historical average. Of those making expenditures, 35% reported spending on new equipment; 23% acquired vehicles; and 15% improved or expanded facilities. Eleven percent spent money on new fixtures and furniture, and 6% acquired new buildings or land for expansion.
Seventeen percent (seasonally adjusted) of small business owners plan to make capital outlays in the next six months, up 1 point from March’s lowest level since November 2009.
A seasonally adjusted net negative 8% of all owners reported higher nominal sales in the past three months, down 3 points from March. The net percent of owners expecting higher real sales volumes over the next quarter fell 4 points from March to a net 3% (seasonally adjusted), the lowest reading in 12 months.
The net percent of owners reporting inventory gains rose 1 point to a net negative 5%, seasonally adjusted. Not seasonally adjusted, 12% reported increases in stocks, and 16% reported reductions. A net negative 2% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in April, up 3 points from March. A net negative 2% (seasonally adjusted) of owners plan inventory investment in the coming months, up 3 points from March.
In April, 64% of small business owners reported that supply chain disruptions affected their business to some extent, up 2 points from March. Five percent reported a significant impact (up 2 points); 19% reported a moderate impact (up 2 points); 40% reported a mild impact (down 2 points); and 35% reported no impact (down 1 point).
Both actual and planned price increases rose in April, signaling additional inflationary pressure. The net percent of owners raising average selling prices rose 5 points from March to a net 30% (seasonally adjusted), well above its historical average. Looking forward to the next three months, a seasonally adjusted net 27% plan to increase prices, up 3 points from March.
Sixteen percent of owners reported that inflation was their single most important business problem, up 2 points from March, ranking third among the top issues.