Small Business Optimism Increases in April, Job Openings Remain at Record Highs

The National Federation of Independent Business (NFIB) Small Business Optimism Index rose to 99.8 in April, an increase of 1.6 points from March. The Optimism Index has increased 4.8 points over the past three months since January but a record 44 percent of owners reported job openings that could not be filled.

“Small business owners are seeing a growth in sales but are stunted by not having enough workers,” said NFIB Chief Economist Bill Dunkelberg. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”

Other key findings include:

  • Eight of the 10 Index components improved and two declined.
  • The NFIB Uncertainty Index decreased one point to 80.
  • Earnings trends over the past three months improved eight points to a net negative 7 percent.
  • Owners have plans to invest in their businesses as the percentage of those planning to make capital expenditures in the next three to six months increased seven points to 27 percent.
  • The percent of owners expecting better business conditions over the next six months fell seven points to a net negative 15 percent.

Forty-seven percent reported capital outlays in the last six months, down two points from March but 10 points above last year’s low. Of those making expenditures, 42 percent reported spending on new equipment, 25 percent acquired new vehicles, and 15 percent improved or expanded facilities. Six percent acquired new buildings or land for expansion and 12 percent spent money for new fixtures and furniture. Twenty-seven percent plan capital outlays in the next few months. Hopefully supportive of improved productivity.

A net 3 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up nine points from March. The net percent of owners expecting higher real sales volumes improved one point to a net 1 percent.

A net 31 percent (seasonally adjusted) reported raising compensation. A net 20 percent plan to raise compensation in the next three months. Increased compensation is being passed on to customers through higher prices.

Eight percent cited labor costs as their top business problem and 24 percent said that labor quality was their top business problem, unchanged from March and the top overall concern.

The frequency of positive profit trends improved eight points to a net negative 7 percent reporting quarter on quarter profit improvement. Among owners reporting lower profits, 39 percent blamed weaker sales, 16 percent cited the usual seasonal change, 14 percent cited a higher cost of materials, 7 percent cited lower prices, 6 percent cited labor costs, and 4 percent cited higher taxes or regulatory costs. For those reporting higher profits, 62 percent credited sales volumes, 15 percent cited usual seasonal change, and 10 percent cited higher prices.

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