NFIB: Highly-watched small business index plods along, qualified workers hard to find

Optimism among the nation’s small business owners rose slightly in April, but most still cannot find qualified workers to fill open positions and cite a poor economy and the political climate as their two main reasons for not expanding.

Such findings were from the National Federation of Independent Business’ (NFIB) monthly economic survey released Tuesday (May 10). NFIB’s monthly Small Business Economic Trends survey is based on a monthly survey of small businesses. The survey was conducted in April and reflects the response from 1,644 small businesses.

NFIB’s overall Index of Small Business Optimism rose 1 point in April and now stands at 93.6, which is still well below the 42-year average of 98. Five of the 10 Index components posted a gain, four were unchanged, and one posted a small decline.

“Despite a gain in NFIB’s optimism reading, small business owners remain extremely pessimistic about the economy, and rightfully so,” said NFIB Chief Economist William Dunkelberg.

State-specific data isn’t available, but Sylvester Smith, Arkansas’ NFIB director, said national trends are reflected in Arkansas.

“It’ll be a long time before we’re back to where we were in December 2014 when the Index reached a recovery high of 100,” he said.

The biggest increase in the Index was owners reporting they had job openings that were hard to fill. This suggests that not only are labor markets tightening, but owners cannot find qualified workers to hire.

The political climate continued to be the second most frequently cited reason for why owners think the current period is a bad time to expand. Small business owners who expect business conditions to improve in the next six months was the only component to decline and now sits at 18%.

“There is no leadership in Washington, no articulations of a path to a better future, and no evidence that policy-making is focused on promoting economic growth or job creation,” Dunkelberg said. “The prospects that strong, unifying leadership will emerge after the election also appears to be poor.”

Dunkelberg noted that the University of Michigan’s Consumer Sentiment Index posted another decline, offering no hope for small business owners that spending will increase.

“Overall, there is no exuberance to be found in the economy and small business owners will just continue to plod along,” he said.

NFIB’s monthly Small Business Economic Trends survey is based on a monthly survey of small businesses. The survey was conducted in April and reflects the response of 1644 small businesses.