Small Business Optimism Index rises despite labor concerns

William Dunkelberg

A measure of optimism among small business owners has increased despite concerns over unfilled jobs.

The National Federation of Independent Businesses reported its Small Business Optimism Index rose 1.6 points to 99.8 in April.

“Small business owners are seeing a growth in sales, but are stunted by not having enough workers,” said Bill Dunkelberg, chief economist of the NFIB. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth.”

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners.

For April, eight of 10 components of the index advanced and two retreated.

The proportion of those who responded to the survey upon which the April index was based who expect the economy to improve actually dropped seven points. At a net negative 15 percent, more respondents said they expected worsening conditions.

Other components reflected more upbeat expectations, however.

A net 27 percent of those who responded reported plans to increase capital outlays, up seven points. A net 14 percent said they consider now a good time to expand, up three points.

The share of respondents reporting higher earnings rose eight points. But at a net negative 7 percent, more reported lower earnings. Among those reporting lower earnings, 39 percent blamed weaker sales, 16 percent seasonal changes and 14 percent higher materials costs.

A net 1 percent said they expect higher sales over the next three months, up a point.

A net 5 percent reported plans to increase inventories, up a point. A net 7 percent said they consider current inventories too low, up four points.

A net 21 percent of respondents reported plans to increase staffing, down a point. A net 44 percent reported unfilled job openings, up two points to a record-high reading.

Asked to name their single most important business problem, 24 percent cited quality of labor.

A net 31 percent of those who responded reported increasing compensation, while a net 20 percent reported plans to raise compensation over the next three months.

“Owners are raising compensation, offering businesses and benefits to attract the right employees,” Dunkelberg said.