Small business confidence hits 10-year low.

Small Business Confidence Hits Decade Low

The National Federation of Independent Business (NFIB) has reported that small business owners’ confidence has fallen to its lowest level in a decade. The index of owner optimism fell 1.1 points to 89 in April, with the barometer of expectations for future business conditions sinking to a four-month low. The gauge of sales expectations was the weakest since August. Analysts had expected a score of 89.7 on the index. The prior reading was 90.1.

Concerns over Quality Workers

The NFIB Chief Economist, Bill Dunkelberg, said: “Optimism is not improving on Main Street as more owners struggle with finding qualified workers for their open positions. Inflation remains a top concern for small businesses but is showing signs of easing.” The NFIB said labour quality was the top concern among businesses at 24%, just ahead of inflation at 23%.

Inventory Stocks Too Large

A net negative 5% of smaller owners viewed current inventory stocks as “too low” in April, down six points from March. The NFIB said this suggests stocks are now too large relative to expected sales, which could mean more inventory drawdown in the months ahead. Shrinking inventories were a drag on gross domestic product in the first quarter and many economists expected a rebound in the second quarter.

Tight Labour Market

The labour market indicators suggest tightness remains. A net 17% of small businesses plan to create new jobs in the next three months. A net 40% reported raising compensation and a new 21% plan to raise compensation in the next three months. Nine percent cited labour costs as their top business problem. About 45% said they have job openings that they could not fill, an increase two points from March.

Historically Weak Capital Outlays

Less than one in five owners plan capital outlays in the next few months, down one point from March. The NFIB described this as “historically very weak.”

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