The NFIB Small Business Optimism Index was unchanged in April, remaining at 93.2 and the fourth consecutive month below the 48-year average of 98. Small business owners expecting better business conditions over the next six months decreased one point to a net negative 50 percent, the lowest level recorded in the 48-year-old survey.

Inflation continues to be a problem for small businesses with 32 percent of small business owners reporting it’s their single most important problem in operating their business, the highest reading since the fourth quarter of 1980.

“Small business owners are struggling to deal with inflation pressures,” said NFIB Chief Economist Bill Dunkelberg. “The labor supply is not responding strongly to small businesses’ high wage offers and the impact of inflation has significantly disrupted business operations.”

Key findings include:

• Forty-seven percent of owners reported job openings that could not be filled, unchanged from March.
• The net percent of owners raising average selling prices decreased two points to a net 70 percent (seasonally adjusted), two points below last month’s highest reading.
• The net percent of owners who expect real sales to be higher increased six points from March to a net negative 12 percent.

As reported in NFIB’s monthly jobs report, small businesses continue to struggle to find workers to fill open positions with 47 percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period. Of those hiring or trying to hire, 93 percent of owners reported few or no qualified applicants for the positions they were trying to fill.

Fifty-four percent of owners reported capital outlays in the last six months, down two points from March. Of those owners making expenditures, 40 percent reported spending on new equipment, 24 percent acquired vehicles, and 14 percent improved or expanded facilities. Eight percent acquired new buildings or land for expansion and 11 percent spent money for new fixtures and furniture. Twenty-seven percent of owners plan capital outlays in the next few months, up one point from March.

Seasonally adjusted, 3 percent of all owners reported higher nominal sales in the past three months, down one point from March and a poor reading. The net percent of owners expecting higher real sales volumes increased by six points to a net negative 12 percent.

The net percent of owners reporting inventory increases went up four points to a net 4 percent. Nineteen percent of owners reported increases in stocks while 15 percent reported reductions as solid sales reduced inventories at many firms.

Thirty-six percent of owners reported that supply chain disruptions have had a significant impact on their business. Another 34 percent report a moderate impact and 20 percent report a mild impact. Only 8 percent of owners reported no impact from recent supply chain disruptions.

Up three points from March, a net 6 percent of owners viewed current inventory stocks as “too low” in April. A net 1 percent of owners plan inventory investment in the coming months, down one point from March.

The net percent of owners raising average selling prices decreased two points from March’s record high reading to a net 70 percent (seasonally adjusted). Four percent reported lower average selling prices and 70 percent reported higher average prices. Price hikes were the most frequent in wholesale (85 percent higher, 0 percent lower), construction (81 percent higher, 3 percent lower), retail trades (76 percent higher, 4 percent lower), and manufacturing (70 percent higher, 3 percent lower). A net 46 percent of owners plan price hikes (seasonally adjusted).

A net 46 percent (seasonally adjusted) reported raising compensation, down three points from March. A net 27 percent of owners plan to raise compensation in the next three months. Eight percent of owners cited labor costs as their top business problem and 23 percent said labor quality was their top business problem.

The frequency of reports of positive profit trends was a net negative 17 percent. Among the owners reporting lower profits, 34 percent blamed the rise in the cost of materials, 22 percent blamed weaker sales, 14 percent cited the usual seasonal change, 11 percent cited labor costs, 9 percent cited lower prices, and 2 percent cited higher taxes or regulatory costs. For the owners reporting higher profits, 51 percent credited sales volumes, 13 percent cited usual seasonal change, and 19 percent cited higher prices.

Two percent of owners reported that all their borrowing needs were not satisfied. Twenty-six percent of owners reported all credit needs met and 61 percent said they were not interested in a loan.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in April 2022.