Small-business owners’ optimism bounced back in April, after declining the prior month, according to a new report from the National Federation of Independent Business (NFIB). The NFIB’s Small Business Optimism Index climbed 2 points in April to 94.5. The increase helped the index recover from a 1.8 point drop in March. The NFIB’s index […]
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Small-business owners’ optimism bounced back in April, after declining the prior month, according to a new report from the National Federation of Independent Business (NFIB).
The NFIB’s Small Business Optimism Index climbed 2 points in April to 94.5. The increase helped the index recover from a 1.8 point drop in March.
The NFIB’s index has now increased in six of the last seven months. But it remains weak, according to the NFIB. April’s gains only returned the optimism index to its level of February 2011, when it also notched 94.5.
A slightly brighter employment outlook helped the index resume its rise in April. Seasonally adjusted, a net 5 percent of business owners planned to increase employment over the next three months, according to the NFIB’s surveying. That’s up 5 points from March, when a net 0 percent of owners anticipated hiring.
However, more small businesses also reported job openings that were difficult to fill. The portion of companies who said they had job openings that they could not fill climbed 2 points to 17 percent, seasonally adjusted.
New York director’s comments
Many of New York’s small-business owners are coming off a period of stronger-than-expected sales, according to NFIB New York State Director Mike Durant. That period may not continue, he adds.
“In talking to business owners over the last few days, I’m hearing that the winter was a little better than we thought, and it continued into the spring,” he says. “However, we’re starting to see ourselves slow drastically in comparison to what we’ve seen in previous years.”
Fluctuations in gas prices and consumers’ willingness to spend are leading to fluctuations in optimism among business owners, Durant says.
“Business owners and consumers are sort of on a yo-yo right now,” he says. “One month, they’re seeing gas above $4 a gallon. This month, they’re seeing it under $4. Although we’ve had a bit of an optimism uptick, I would not be shocked at all to see us drop down next month.”
Other survey findings
Small-business owners became slightly more optimistic about general business conditions in six months, but cynicism still reigned. The portion of owners who anticipated better conditions in half a year inched up 3 points to a net -5 percent, seasonally adjusted.
The negative result shows that more owners predicted worse conditions than predicted better conditions. The NFIB calculates net percentages by subtracting pessimistic survey answers from optimistic answers. A positive net percentage indicates a majority of respondents were optimistic, while a negative net percentage indicates a majority were pessimistic.
A majority of business owners were also pessimistic about accessing credit in the future. The net percentage of regular borrowers expecting easier credit access over the next three months ticked up 3 points, yet remained negative at -8 percent.
Plans to make capital expenditures over the next three to six months increased, the NFIB found. Seasonally adjusted, 25 percent of survey respondents said they planned capital expenditures, a rise of 3 points from March.
Even so, the share of business owners who view the next three months as a good time to expand was unchanged from March. It remained at a seasonally adjusted 7 percent in April.
Inventory plans were unchanged in April as well. Seasonally adjusted, a net 0 percent of small-business owners said they planned to increase inventories in three to six months, the same as in March.
Firms appear to be satisfied with their current inventory levels, according to the NFIB survey. A seasonally adjusted net 0 percent of business owners believed their inventories were too small in April, a dip of 3 points.
Sales expectations decreased in April, as the portion of survey respondents predicting higher sales in the next three months fell by 2 points. That survey indicator registered a net 6 percent, seasonally adjusted.
Even so, business owners reported an increase in actual sales over the last three months. Seasonally adjusted, a net 4 percent of owners said sales were higher in the last three months than they were in the prior three months. That’s up 3 points from March.
Sales posed a major challenge for businesses, as 19 percent of owners cited poor sales as their single most important problem. However, government requirements and red tape was the top problem, which 20 percent of small businesses citing it as their single most important problem.
The NFIB, a nonprofit organization representing members in all 50 states and Washington, D.C., calculated the Small Business Optimism Index after surveying 1,817 of its members in April.
