U.S. Small Business Optimism Remains Weak

The NFIB Small Business Optimism Index held steady at 93.2 in April following three consecutive monthly declines. In April, five of the index's 10 components declined from March levels, two increased and three held steady. The survey was conducted by the National Federation of Independent Business.

The outlook for business conditions in the next six months deteriorated to another record low of -50% of respondents who expected the economy to improve versus -14% twelve months earlier. Expected real sales improved slightly to a net -12%, the lowest reading since May 2020. Plans to expand the business fell for the fourth consecutive month to a net 4% in April, its lowest reading since May 2020.

The employment outlook remained weak. A steady net 20% planned to increase the number of jobs, which was down from 32% in August of last year. The percentage of firms with few or no qualified job applicants for job openings held steady at 55%, down from 62% last September.

Inflation pressures remained strong as a near-record 70% of respondents were raising average selling prices in April, roughly double the 36% reading twelve months earlier. The percentage planning to raise prices rose eased to 46% from 50% in March yet remained above the 36% twelve months earlier.

Wage inflation also remained strong as a net 46% of respondents raised compensation during the last three months, down slightly from the January peak of 50% but higher than 14% in the spring of 2020. A lessened 27% of firms planned to raise worker compensation versus 32% in December.

Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The typical NFIB member employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver's SURVEYS database.