The confidence of small business owners dropped in April, according to the NFIB Small Business Optimism Index.
The index declined by 1.6 points in April to 95.8, marking the second consecutive month that it dropped below the 51-year average of 98.
Also, the Uncertainty Index decreased four points from March to 92 but remained well above the historical average of 68.
“Uncertainty continues to be a major impediment for small business owners in operating their business in April, affecting everything from hiring plans to investment decisions,” NFIB Chief Economist Bill Dunkelberg said. “While owners are still trying to fill a high number of current job openings, their outlook on business conditions is less supportive of future business investments.”
Among the key findings, the report revealed that:
- The net percent of owners expecting better business conditions fell six points from March to a net 15 percent (seasonally adjusted), the lowest since last October. This component, along with unfilled job openings, contributed most to the Optimism Index’s decline.
- The net percent of owners expecting higher real sales volumes fell four points from March to a net negative 1 percent (seasonally adjusted). This is the fourth consecutive month real sales expectations declined.
- Eighteen percent (seasonally adjusted) plan capital outlays in the next six months, down three points from March. The last time the percent of firms planning capital outlays was this low was in April 2020, during the COVID-19 pandemic.
- The percent of small business owners reporting labor quality as the single most important problem for business was unchanged from March at 19 percent, remaining the top issue for the third consecutive month.
- Fourteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from March and the lowest reading since September 2021. Inflation is now ranked in third place as the single most important problem.
- When asked to rate the overall health of their business, 13 percent reported excellent (up two points), and 56 percent reported good (up three points). Twenty-seven percent reported the health of their business was fair (down four points) and 4 percent reported poor (unchanged).
In addition, 34 percent of business owners reported job openings they could not fill in April, down six points from March. The last time job openings were below this level was in January 2021. Of the 56 percent of owners hiring in April, 85 percent reported few or no qualified applicants for the positions they were trying to fill. A net 13 percent of owners plan to create new jobs in the next three months, up one point from March.
Survey respondents are randomly drawn from NFIB’s membership.