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Economy in Brief

U.S. NFIB Small Business Optimism Index Strengthens in April
by Tom Moeller  May 11, 2021

• Optimism rebounds to highest level since November.

• Improved optimism is widespread amongst survey categories.

• Pricing power improves greatly.

The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index rose sharply to 99.8 during April from 98.2 during March. The NFIB release indicated that "Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth."

A minimally improved net 1% of respondents are expecting higher real sales. A net 14% felt that now was a good time to expand the business, the most since February of last year. A greatly strengthened net 27% were planning to make capital expenditures. Earnings trends improved over the past three months.

A lessened -14% were expecting the economy to improve while a slightly lessened net 21% of firms planned to increase employment. A higher 54% were finding few or no qualified candidates to fill job openings, up from 37% in May 2019. It was the highest percentage since August 2019.

Credit was hard to get by an increased three percent of respondents, the most since December.

Pricing power surged with a net 31% of firms raising prices in April, the most in twenty years. A net 31% of firms raised worker compensation in April, up from 15% last spring and the most since March of last year.

Important issues for small businesses were lessened quality of labor (24%), taxes (19%), government requirements (13%) and rising labor costs (9%).

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.

National Federation of Independent Business (SA, Net % of Firms) Apr Mar Feb Apr '20 2020 2019 2018
Small Business Optimism Index (1986=100) 99.8 98.2 95.8 90.9 99.6 103.0 106.7
Firms Expecting Economy to Improve -14 -8 -19 29 20 13 32
Firms Expecting Higher Real Sales 1 0 -8 -42 1 18 26
Firms Reporting Now Is a Good Time to Expand the Business 14 11 6 3 13 25 30
Firms Planning to Increase Employment 21 22 18 1 16 19 21
Firms With Few or No Qualified Applicants for Job Openings (%) 54 51 51 41 46 52 51
Earnings Trends -7 -15 -11 -20 -16 -5 -2
Firms Reporting that Credit Was Harder to Get 3 1 1 4 3 4 4
Firms Raising Average Selling Prices 36 26 25 -18 5 13 15
Firms Raising Worker Compensation 31 28 25 16 23 31 33
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