Despite concerns about inflation and the economy’s prospects, a gauge of small-business sentiment remained stable last month.
The National Federation of Independent Business’ optimism index for April was 93.2, the organization announced on Tuesday. There was a one-point decline in the net share of owners expect better business conditions in the next six months.
Inflation remains a major operating challenge for some 32% of respondents, a slight increase from March and the highest level since the fourth quarter of 1980. NFIB data indicate that this share has increased in six of the last seven months. Since 1986, monthly surveys have been conducted.
The second-biggest problem was labor quality, and the number of planned compensation changes remains high. According to government data released this week, consumer prices are expected to rise slower than expected in April, but remain near their highest level in 40 years.
Inflation pressures pose a challenge for small business owners, according to Bill Dunkelberg, the NFIB’s chief economist. Inflation’s impact on small businesses’ high wage offers has caused severe disruption to business operations. High wage offers by small businesses have not been responding well to the labor supply.
Small businesses have had difficulty filling a record number of vacancies, as they don’t always have the same resources to attract new employees as large companies. The ADP Research Institute reported last week that small businesses saw the biggest drop in payrolls in two years in April, while large businesses experienced solid hiring gains.
A small-business sentiment gauge is composed of 10 components, five of which declined in April. Fewer owners plan to expand and fewer plan to boost inventories now.
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