Small-Business Index in U.S. Fell in April to Seven-Month Low
Confidence among U.S. small companies fell to a seven-month low in April, damped by a deteriorating outlook for the economy, a private survey showed.
The National Federation of Independent Business’s optimism index decreased to 91.2, the lowest since September, from 91.9 the prior month, the Washington-based group said today in a statement. Seven of the measure’s 10 components dropped.
Small-business owners are reluctant to ramp up hiring and investing until they see a pickup in demand, indicating bigger gains in employment will be difficult to achieve. The report also showed the share of survey participants who planned to raise prices held at the highest level in 30 months, and fewer owners predicted sales to rise after adjusting for inflation.
“Owners found no reason to be optimistic about the future and so no reason to pick up the pace of spending and hiring,” William Dunkelberg, the group’s chief economist, said in a statement. “Spending must recover here to get employment up and running.”
The group’s gauge of expectations for better business conditions six months from now dropped 3 points to a net minus 8 percent last month. A measure of whether small firms think this is a good time to expand fell 1 point to a net 4 percent.
The NFIB survey’s net figures are calculated by subtracting the percent of business owners giving a negative answer from those with a positive response, and adjusting the results for seasonal variations.
Hiring Plans
The report showed hiring plans stagnated last month, and a measure of hard-to-fill job openings dropped 1 point from the prior month to a net 14 percent. Plans for capital investment fell by 3 points to a net 21 percent.
The net share of owners projecting higher sales, adjusted for inflation, fell 1 point to 5 percent. At the same time, a measure of earnings trends increased by 6 points to a net minus 26 percent.
Small businesses planning to increase prices held at a net 24 percent of owners for a second month, according to the report.
The NFIB report was based on 1985 small-business owners surveyed through April 29. Small businesses represent more than 99 percent of all U.S. employers and have created 65 percent of new jobs in the past 17 years, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise employing up to 500 people.
To contact the report on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
To contact the editor responsible for this story; Christopher Wellisz at cwellisz@bloomberg.net
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