Small Business Operations Still Impacted by Inflation

The National Federation of Independent Business (NFIB) has released its Small Business Optimism Index for April 2024, showing slight improvements but highlighting ongoing challenges due to inflation and labor costs.

The NFIB’s Small Business Optimism Index rose by 1.2 points in April to 89.7, the first increase of the year. However, the index has remained below the 50-year average of 98 for 28 consecutive months. Inflation remains a top concern for 22% of small business owners, although this is down three points from March.

Bill Dunkelberg, NFIB Chief Economist, expressed that cost pressures remain the top issue for small business owners, with high levels of owners raising compensation to retain and attract employees. Despite the slight improvement in optimism, small business owners remain historically very pessimistic as they navigate these challenges.

Key findings from the report include an increase in the net percentage of owners expecting higher real sales and planning to create new jobs in the next three months. Price hike plans have decreased, but compensation raises remain prevalent. Labor market struggles persist, with many owners reporting unfilled job openings and difficulty finding qualified applicants.

Inflation and labor costs continue to be top concerns for small business owners, with financing challenges also present. The report provides insights into inventory levels, profit trends, and borrowing needs among small businesses. Overall, while there have been some positive developments, small business owners are still facing significant challenges in the current economic landscape.