Small businesses optimism remained at a relatively low level in April as decades-high inflation continued, according to the National Federation of Independent Businesses’ Index of Small Business Optimism.
The NFIB’s quarterly survey of economic indicators remained at 93.2, below the 48-year average of 98. The reading ends three straight months of declines. Thirty-two percent of owners said inflation was their most important problem, a slight increase from March and the highest reading since Q4 1980. A majority of wholesalers, retail trades and manufacturers reported price hikes in April.
The number of owners anticipating improved business conditions over the next six months slightly dropped, to a record low net negative 50 percent.“Owners are very pessimistic about sales and business conditions in the second half of the year,” the report stated. “This dampens capital investment and, eventually, will feed into employment if sales actually slow as expected.”
Another major issue for small businesses is the worker shortage: Nearly half said they had job openings they could not fill in the current period. Forty percent have openings for skilled workers, and 22 percent have openings for unskilled labor positions. Ninety-three percent of businesses hiring or trying to fill open positions said there were “few or no qualified applicants” for the roles they were trying to fill. A net 46 percent of small businesses reported raising pay, according to the report, and more than one-quarter expect to raise compensation in the next three months.
“Labor supply is not responding strongly to their high wage offers,” the NFIB stated. “Job growth will continue opportunistically but not robustly as the available supply of workers is small.”
Supply chain disruptions also continue wreaking havoc on small businesses: 36 percent said shortages as having a significant impact, and a similar number reported moderate impacts. Small business loan demand remains limited: Sixty-one percent of owners said they were not interested in a loan last month. Only 2 percent said their borrowing needs were not met. Twenty-six percent said their credit needs had been met.