The NFIB Small Business Optimism Index rose to 99.8 in April, an increase of 1.6 points from March. The Optimism Index has increased 4.8 points over the past three months since January, but a record 44 percent of owners reported job openings that could not be filled.
“Small business owners are seeing a growth in sales but are stunted by not having enough workers,” said NFIB Chief Economist Bill Dunkelberg. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”
Other key findings include:
- Eight of the 10 Index components improved and two declined.
- The NFIB Uncertainty Index decreased one point to 80.
- Earnings trends over the past three months improved eight points to a net negative 7 percent.
- Owners have plans to invest in their businesses as the percentage of those planning to make capital expenditures in the next three to six months increased seven points to 27 percent.
- The percent of owners expecting better business conditions over the next six months fell seven points to a net negative 15 percent, surprisingly glum.
Forty-seven percent reported capital outlays in the last six months, down two points from March but 10 points above last year’s low. Of those making expenditures, 42 percent reported spending on new equipment, 25 percent acquired new vehicles, and 15 percent improved or expanded facilities. Six percent acquired new buildings or land for expansion and 12 percent spent money for new fixtures and furniture. Twenty-seven percent plan capital outlays in the next few months. Hopefully supportive of improved productivity.
A net 3 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up nine points from March. The net percent of owners expecting higher real sales volumes improved one point to a net 1 percent.
The net percent of owners reporting inventory increases rose three points to a net 3 percent. A net 7 percent of owners view current inventory stocks as “too low” in April, up four points. A net 5 percent of owners plan inventory investment in the coming months, up one point from March.
The net percent of owners raising average selling prices increased 10 points to a net 36 percent (seasonally adjusted), the highest reading since April 1981 when it was 43 percent. The highest was 67 percent in October 1974 when inflation reached double digit rates. Price hikes were the most frequent in wholesale (62 percent higher, 3 percent lower) and retail (46 percent higher, 6 percent lower). Seasonally adjusted, a net 36 percent plan price hikes, the highest reading since July 2008.
A net 31 percent (seasonally adjusted) reported raising compensation. A net 20 percent plan to raise compensation in the next three months. Increased compensation is being passed on to customers through higher prices.
Eight percent cited labor costs as their top business problem and 24 percent said that labor quality was their top business problem, unchanged from March and the top overall concern.
The frequency of positive profit trends improved eight points to a net negative 7 percent reporting quarter on quarter profit improvement. Among owners reporting lower profits, 39 percent blamed weaker sales, 16 percent cited the usual seasonal change, 14 percent cited a higher cost of materials, 7 percent cited lower prices, 6 percent cited labor costs, and 4 percent cited higher taxes or regulatory costs. For those reporting higher profits, 62 percent credited sales volumes, 15 percent cited usual seasonal change, and 10 percent cited higher prices.
Two percent of owners reported that all of their borrowing needs were not satisfied, 26 percent reported all credit needs met, and 59 percent said they were not interested in a loan. A net 3 percent reported their last loan was harder to get than in previous attempts. One percent of owners reported that financing was their top business problem.
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