A monthly measure of confidence among small business owners has rebounded on more upbeat expectations for everything from capital outlays and hiring to profits. Still, the index remains below its long-term average and continues to reflect uncertainty.
“Optimism may have seen a slight bump from last month’s weak numbers. But there was not an especially large gain in any area except for an improvement in profit trends. Small business owners are still wary of the future, and that’s most evident when we asked them about future sales,” said Bill Dunkelberg, chief economist of the National Federation of Independent Business.
The NFIB reported that it’s Small Business Optimism Index rose 1.7 points to 96.9 in April. The gain erased more than half the 2.8-point drop the month before and moves closer to the long-term average reading of 98.1.
The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group. For April, eight of 10 components of the index increased.
“Overall, the index remains steady, but it is still a few points below the average and is showing no tendency to break out into a stronger pattern of economic growth,” Dunkelberg said. “The little economic growth we do see is coming mostly from small businesses. Solid economic growth would require good performance from both big and small firms, and that will likely be elusive this year.”
The proportion of small business owners responding to the survey upon which the April index results were based who expect the economy to improve edged up a point, but remained at a net negative 6 percent.
Reports of positive earnings trends jumped six points, the biggest single increase among the 10 components for April, but remained at a net negative 16 percent.
The share of owners who plan to make capital outlays over the next three to six months rose two points to a net 26 percent despite reduced outlays in the energy sector related to lower prices. The proportion of owners who said they consider now a good time to expand remained unchanged at a net 10 percent.
A net 11 percent of owners reported plans to increase staffing, up a point. A net 27 percent of owners reported hard-to-fill job openings, up three points.
The share of owners who plan to increase inventories increased three points to a net 4 percent. The proportion of owners who said existing inventories are two low rose four points to a net negative 1 percent.
However, the proportion of owners who expect increased sales fell three points to a net 10 percent. A net 11 percent of owners cited weak sales as their most pressing business problem, fourth behind government regulation, taxes and quality of labor.