Input Stories

The NFIB Small Business Optimism Index fell 1.6 points in April to 95.8, remaining below the 51-year average of 98. April’s drop stemmed from a decline in the number of business owners expecting better business conditions and the number of unfilled jobs. Of the 10 components included in the index, only three increased, six decreased and one stayed the same. The Uncertainty Index fell four points to 92 but remains far above the 51-year average (68) and the average since 2016 (80).

Labor quality was cited as the top concern for many small business owners in April, with 19% reporting it as the most important problem for the third month in a row. In April, 34% of small business owners reported jobs they could not fill, down six percentage points from March. The challenge of filling open positions remains acute, particularly in manufacturing, transportation and construction. Taxes were the second most important concern, with 16% reporting them as their most important problem, down two points from March. Inflation now ranks third.

A net 33% of small business owners reported raising compensation, down five percentage points from March. Profitability remained under pressure, with a net negative 21% reporting positive profit trends, but was seven points better than in March and the highest reading since March 2023. Of those reporting lower profits, 38% claimed weaker sales, while 14% cited ordinary seasonal adjustments. A net 28% of small business owners planned price hikes in April, down two percentage points from March, and demand remains too strong to trigger widespread price reductions. Meanwhile, 5% reported their last loan was harder to get than previous attempts, down one point from March, but a net 6% of owners reported paying a higher rate on their most recent loan, up two points from the prior month.

The outlook for general business conditions fell six points to 15, the lowest since last October. Additionally, the share of firms saying it is a good time to expand remained the same at 9%. The outlook will remain gloomy and turbulent as long as uncertainty is the norm. Down from highs post-election, when optimism netted 52% in December and far more small businesses were expecting better business conditions in the next six months, expected business conditions are back down to 15%. This is still more optimistic than this time last year, when the indicator netted -37%, meaning businesses expected worse conditions.