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In The News:

NFIB Small Business Optimism Index Rises in April

The NFIB’s Index of Small Business Optimism for April rose 2.6 points to 92.1, just above the recovery average of 90.7. Four Index components rose, two fell and four were unchanged. The NFIB is the National Federation of Independent Business.

Pessimism continues to plague the sector, as still far more of those surveyed expect business conditions to be worse in six months than those who think they will be better.

“Small-business confidence saw an uptick this last month, but it was a 'ho hum, yawn, at-least-it-didn’t-go-down' reading. The subpar recovery persists for the small business sector,” said NFIB chief economist Bill Dunkelberg. “Economic performance is contradictory – corporate profits are at record levels and the stock market hits new highs, yet GDP growth for the past six months has averaged about 1.5 percent and the unemployment rate is 7.5 percent.

“Nothing in the NFIB data suggests that the small business half of the economy is expanding other than by an amount driven by population growth and associated new business starts now in excess of terminations. The lack of leadership in Washington and the resulting uncertainty depresses consumers’ and business owners’ willingness to spend and invest, and make bets on the future,” he said.

Owners were asked to identify their top business problem: 23 percent cited taxes, 21 percent cited regulations and red tape and 16 percent still cited weak sales. Only 2 percent reported financing as their top business problem.

Here are some key indicators from the April report:

Job Creation: April was another positive, albeit lackluster month for job creation. Small employers reported increasing employment an average of 0.14 workers per firm in April. This is a bit lower than March’s reading, but the fifth positive sequential monthly gain. Job creation plans rose 6 points to a net six percent planning to increase total employment.

Hard to Fill Job Openings: Nearly half (49 percent) of owners surveyed hired or tried to hire in the last three months and 38 percent (78 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.

Inventories: The pace of inventory reduction continued, with a net -6 percent of all owners reporting growth in inventories. For all firms, a net -1 percent (unchanged) reported stocks too low, historically a good level of satisfaction with inventory stocks. Plans to increase inventories gained 5 points but rose only to a net 0 percent of all firms.

Inflation: Twenty percent of surveyed NFIB owners reported price increases (up 2 points) and 15 percent reported reducing their average selling prices in the past three months (down 2 points). The net percent of owners raising selling prices was three percent, up 4 points. Twenty-one (21) percent of owners plan to raise average prices in the next few months, and three percent plan reductions, both unchanged from March’s report.

Download the complete study at www.nfib.com/sbetindex.

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