Small-business confidence in the United States increased in April, according to a report from the National Federation of Independent Business (NFIB). The Small Business Optimism Index rebounded 1.2 points to 89.7 last month, after slumping to its lowest level in over six years in March. Despite this improvement, the index has remained below the 50-year average of 98 for the 28th consecutive month.
Inflation remains a concern for small-business owners, but it is not as pressing as it once was. Only 22% of owners cited inflation as their most pressing concern in April, down 3 points from March. The percentage of businesses planning to increase prices also dropped to 26%, which is the lowest level since April 2023. Additionally, the proportion of businesses raising average selling prices decreased by 3 points to 25%.
Labor shortages continue to be an area of concern for small-business owners, with 40% reporting job openings they could not fill in April. This represents a rebound of 3 points from the previous month’s reading. To attract and retain employees, many business owners have increased compensation, with 38% having done so and another 21% planning to do so in the near future.
NFIB chief economist Bill Dunkelberg noted that cost pressures remain a significant issue for small-business owners, even though price increases have slowed down somewhat due to inflation concerns and labor shortages. He also pointed out that while inflation surged in the first quarter and is expected to decelerate in the coming months as the labor market cools down, attracting and retaining employees will remain a challenge for many small businesses.
Financial markets anticipate that the Federal Reserve will begin easing monetary policy later this year, with some economists predicting a rate cut as early as July. The Fed recently left its benchmark overnight interest rate unchanged between
