U.S. Small Business Confidence Stabilizes in April – NFIB
By Xavier Fontdegloria
The confidence of small business owners in the United States stabilized in April after three consecutive months of decline, but inflation and labor shortages continued to weigh heavily on near-term economic expectations.
The NFIB Small Business Optimism Index was unchanged at 93.2 in April from a month earlier, the lowest level since April 2020. Economists polled by The Wall Street Journal had expected the index falls to 92.9.
The number of respondents expecting better trading conditions over the next six months fell again in April, albeit less than in previous months, according to the NFIB. However, the index fell to the lowest level recorded in the history of the survey.
However, the number of owners expecting higher actual sales in the near term has increased somewhat, although opinions are still bleak, according to survey data.
“Owners are very pessimistic about sales and trading conditions in the second half,” said NFIB chief economist Bill Dunkelberg. “This is dampening capital investment and possibly fueling employment if sales actually slow as expected,” he said.
The NFIB survey is a monthly snapshot of small businesses in the United States, which account for almost half of private sector jobs. Economists turn to the report for a reading of domestic demand and to extrapolate hiring and wage trends in the wider economy.
Earnings trends as well as plans for higher inventories, employment and capital spending remained broadly unchanged in April from the previous month.
Small businesses continued to struggle to find and retain workers, with 47% of owners reporting vacancies that could not be filled, unchanged from March.
“The labor supply does not respond strongly to the high wage offers of small businesses,” Dunkelberg said. “Job growth will continue opportunistically but not robustly as the available supply of workers is low,” he said.
Pricing pressures remained high. In April, 70% of small business owners said they were raising average selling prices, down slightly from 72% the previous month.
Inflation persisted as the most important issue when operating the business with 32% of respondents citing it, the highest reading since the fourth quarter of 1980. “Small Business Owners struggling to cope with inflationary pressures,” Dunkelberg said.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com