Small business owner optimism fell to a 10-year low last month amid an ongoing shortage of qualified employees and continued inflation, according to the National Federation of Independent Business.
The NFIB’s headline index fell by 1.1 points to 89, nine points below the survey’s historical average of 98 and its lowest mark since January 2013. Other readings also indicated a potential recession. Only nineteen percent of owners expect to make capital outlays in the next few months, down one point from March. A net negative 9 percent of owners saw higher nominal sales in the past three months, down three points. Owners expecting real sales volumes to increase fell four points to a net negative 19 percent.
“Optimism is not improving on Main Street as more owners struggle with finding qualified workers for their open positions,” said NFIB Chief Economist Bill Dunkelberg. “Inflation remains a top concern for small businesses but is showing signs of easing.”
Despite a continued shortage in employees, small business owners still planned to fill open positions. A net 17 percent plan to create jobs in the next three months, while a net 40 percent raised compensation. Twenty-one percent plan to raise wages in the next three months.
Fifty-six percent of owners reported capital outlays in the last six months, down one point from March. Of those making expenditures, 40 percent spent on new equipment, 23 percent acquired vehicles and 11 percent invested in new fixtures and furniture. Fifteen percent improved or expanded facilities and six percent acquired new buildings or land for expansion.
The frequency of positive profit trends was a net negative 23 percent, down five points from March, as owners cited weaker sales, rising materials costs and other factors. GDP growth was measured at 1.1 percent in the first quarter of this year, down from 2.5 percent growth late last year. The net percent of owners raising average selling prices fell four points to a seasonally-adjusted net 33 percent. The net percent of owners who expect real sales to increase fell four points to a net negative 19 percent.
Regarding supply chain shortages, 37 percent of owners were only mildly impacted, 31 percent saw a moderate impact and 18 percent reported a significant impact. Owners reporting inventory increases fell six points to a net negative 7 percent. A net negative 5 percent of owners said current inventory stocks were “too low” in April, down six points from March.
“This suggests stocks are now too large relative to expected sales,” the NFIB stated.