Confidence among U.S. small business owners leveled off in April after three consecutive months of declines, but inflation and labor shortages continued to have a strong impact on short-term economic expectations.
The NFIB Small Business Optimism Index in April remained unchanged at 93.2 points from the previous month, the lowest level since April 2020. Economists polled by the Wall Street Journal expected the index to fall to 92.9.
The number of respondents who expected to improve business conditions in the next six months, in April fell again, although less than in previous months, according to NFIB. However, the index fell to its lowest level in the history of the survey.
However, the number of owners who expect to increase real sales in the short term has increased slightly, although opinions were still bleak, according to the survey.
“Owners are very pessimistic about sales and business conditions in the second half of the year,” said NFIB chief economist Bill Dunkelberg. “It slows down investment and will ultimately boost employment if sales do slow down as expected,” he said.
The NFIB survey is a monthly survey of small businesses in the U.S. that account for nearly half of the private sector jobs. Economists are waiting for the report to read about domestic demand and extrapolate hiring and wage trends in the economy as a whole.
Revenue trends as well as plans to increase inventories, employment and capital expenditures in April have not changed overall from the previous month.
Small firms continued to struggle with finding and retaining workers: 47% of owners reported vacancies that could not be filled, and had not changed since March.
“The supply of labor is not very responsive to the proposals of small businesses with high wages,” – said Mr. Dunkelberg. “Job growth will continue, but not reliably, as the number of workers available is small,” he said.
Price pressures continued to rise. In April, 70% of small business owners said they were raising average selling prices, slightly less than 72% in the previous month.
Inflation remained the most important problem in doing business, and 32% of respondents cited it, the highest since the fourth quarter of 1980. “Small business owners are struggling to cope with inflationary pressures,” Mr Dunkelberg said.
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