Small business owner optimism was stagnant last month as uncertainty remains rampant, according to the National Federation of Independent Business. .April’s optimism index increased only 0.1 points to 95.9, below its 52-year average of 98.0 for the second straight month. The index tracking uncertainty fell four points to 88, 20 points higher than its historical average of 68. Owners expecting better business conditions dropped seven points to a net 4 percent, its fourth straight decline and an 18-month low. The small business employment index dropped 1.2 points in April to 100.4, which NFIB attributed to a weakening labor market. Eighteen percent of owners listed labor quality as their most pressing concern, up three points from March and higher than its historical average of 12 percent. Nine percent of owners cited labor costs as their No. 1 issue, down one point from March. Thirty-four percent of small business owners had job openings they could not fill, up two points from March. Unfilled job openings were higher than the historical average of 24 percent, with 29 percent having openings for skilled workers and 13 percent seeing unfilled positions for unskilled labor. A net 13 percent of owners expect to create new jobs in the next three months, up one point from March and near its average of a net 11 percent. More than half of owners were either hiring or trying to hire in April. Nearly half had “few or no qualified applicants” for the positions they were trying to fill. Thirty percent raised compensation, down three points from March. A seasonally adjusted net 18 percent expect to raise pay in the next three months. More than half of owners had capital outlays in the past six months, unchanged from March. Capital expenditures have fallen nine points since the start of the year and remain relatively low. Of expenditures, 35 percent of owners spent on new equipment, 23 percent acquired vehicles and 15 percent expanded or improved facilities. A net negative 8 percent of owners had higher nominal sales in the past three months in April, down three points from the previous month. A net 3 percent of owners expected higher real sales volumes over the next quarter, down four points from March and a 12-month low. Owners raising average selling prices increased five points last month to a net 30 percent, higher than its historical average. Sixteen percent of owners cited inflation as their most pressing concern, up two points from March. NFIB Chief Economist Bill Dunkelberg said the extension of President Donald Trump’s 2017 tax reform — passed as part of last summer’s One Big Beautiful Bill — is positive for small business owners. “Inflationary pressures continue to be a challenge for Main Street,” he added. “While small business optimism is currently fragile, the benefits of the Working Families Tax Cut Act should start to feed into the private sector over the next few months.” Other report findings included:Sixty-four percent of small business owners said supply chain disruptions impacted their business, up two points from March. Thirty-five percent listed no impact. Those findings come as the Iran War continues to cause significant disruptions to global supply chains amid rising energy costs, material shortages and longer shipping lead times. The frequency of positive profit trend reports increased six points from March to a net negative 19 percent. Owners seeing lower profits cited weaker sales, seasonal changes and rising material costs.
