US small business sentiment rebounds in April

Author Logo | Tue, 14 May 2024 10:00:00 GMT

WASHINGTON, May 14 (Reuters) – U.S. small-business confidence increased in April and the share of owners planning to raise prices was the smallest in a year, but persistent labor shortages continued to exert cost pressures for owners, a survey showed on Tuesday.

The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rebounded 1.2 points to 89.7 last month. The index had slumped in March to the lowest level since December 2012. Despite the rebound it was the 28th straight month the index was below the 50-year average of 98.

Twenty-two percent of owners reported that inflation was their single most important problem in operating their business, down 3 points from March. The share of businesses planning price hikes dropped 7 points to 26%, the smallest since April 2023.

The proportion raising average selling prices fell three points to 25%. But the optimism over slower price increases was tempered somewhat by an elevated share of owners raising compensation. A 38% share of owners reported increasing compensation, unchanged from March.

Twenty-one percent planned to boost compensation over the next three months, also unchanged from March. The NFIB reported last week that 40% of owners reported job openings they could not fill in April, rebounding 3 points from March’s lowest reading since January 2021.

“Cost pressures remain the top issue for small business owners, including historically high levels of owners raising compensation to keep and attract employees,” said Bill Dunkelberg, NFIB chief economist.

Inflation surged in the first quarter after slowing for much of last year amid strong domestic demand. Economists are hopeful that prices will resume their downward trend this quarter amid signs that the labor market is cooling.


Financial markets expect the Federal Reserve to start its easing cycle in September, though some economists believe the first interest rate cut could come in July.

The U.S. central bank early this month left its benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July. The Fed has raised its policy rate by 525 basis points since March 2022. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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