Small Business Optimism Falls to Lowest Level in a Decade

(BartekSzewczyk/iStock/Getty Images)
BartekSzewczyk/iStock/Getty Images

Confidence among small business owners fell to the lowest level in a decade as concerns about finding quality workers edged past inflation and profit expectations deteriorated.

The National Federation of Independent Business said Tuesday that its index of owner optimism fell 1.1 points to 89 in April. The barometer of expectations for future business conditions sank to a four-month low. The gauge of sales expectations was the weakest since August.

Analysts polled by Econoday had expected a score of 89.7 on the index. The prior reading was 90.1.

“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.”

The NFIB said labor quality was the top concern among businesses at 24 percent, just ahead of inflation at 23 percent.

A net negative 5 percent of smaller owners viewed current inventory stocks as “too low” in April, down six points from March. The NFIB said this suggests stocks are now too large relative to expected sales, which could mean more inventory drawdown in the months ahead. Shrinking inventories were a drag on gross domestic product in the first quarter and many economists expected a rebound in the second quarter.

The labor market indicators suggest tightness remains. A net 17 percent of small businesses plan to create new jobs in the next three months. A net 40 percent reported raising compensation and a new 21 percent plan to raise compensation in the next three months. Nine percent cited labor costs as their top business problem. About 45 percent said they have job openings that they could npot fill, an increase two points from March.

Less than one in five owners plan capital outlays in the next few months, down one point from March. The NFIB described this as “historically very weak.”



Please let us know if you're having issues with commenting.