News & Insights

The NFIB Small Business Optimism Index edged up 0.1 point to 95.9 in April, remaining below the 52-year average of 98. April’s increase was due to improvements in most indices, with the largest uptick in earnings trends, which were partially offset by a notable decline in expected business conditions. Of the 10 components included in the index, seven increased and three decreased. Meanwhile, the Uncertainty Index fell 4 points to 88, still well above the 51-year average (68) and above the average since 2016 (80).

Labor quality was cited as the top concern for small business owners, with 18% reporting it as the most important problem, up 3 points from March. Among respondents, 34% reported they were struggling to fill jobs and 53% were hiring or trying to hire in April, both up from March. The share of business owners reporting taxes as the top problem fell 2 points from March to 17%. Meanwhile, inflation ranked third in the list of concerns, with 16% reporting it as their top problem, up 2 points from March, with a net 30% of owners raising prices.

A net 30% of small business owners reported raising compensation, down 3 points in April after moving down 1 point in March. Meanwhile, 18% of business owners plan to increase compensation in the next three months, unchanged from March. Pressure on profitability weakened in April, with positive profit trends rising 6 points from March to a net negative 19%. Among owners reporting lower profits, 33% blamed weaker sales, 15% mentioned usual seasonal changes, 13% cited rising material costs, 9% noted labor costs and the same percentage mentioned price changes on their products or services. Meanwhile, 3% of owners reported that their last loan was harder to get than previous attempts, down 2 points from March, and a net 2% of owners cited paying a higher interest rate on their most recent loan, up 5 points from the prior month.

The outlook for general business conditions declined 7 points to 4%, in line with the historical average. Furthermore, expectations for better business conditions are down 11 points from April 2025. At the same time, 7% reported that it is a good time to expand their business, down 4 points from March and a weak reading compared to times of economic expansion. Overall, small business owners remain relatively pessimistic about the outlook as expected business conditions fell for the fourth consecutive month and to its lowest level since October 2024.