U.S. Data Pulse: NFIB Small Business Optimism Little Changed in April

Research evidence excerpt

U.S. Data Pulse: NFIB Small Business Optimism Little Changed in April

UpdateM

The NFIB Small Business Optimism Index rose 0.1 points in April to 95.9, below its 6-

month average and around the same level on "Liberation day". Of the 10 Optimism Index

components, 7 increased and 3 decreased. Small business optimism has retreated from its

post-election peak of 105.1, but remains well above its 2022-24 average.

Uncertainty continued to ease, as the index fell 4 points to 88 in April. It was still lower

than around"Liberation day" and higher than levels seens during COVID. But the direction

of change suggests that small businesses have not been meaningfully affected by

geopolitical uncertainty stemming from Iran.

Hiring conditions were about the same as in March. 34% of small business owners

reported unfilled job openings, up 2 points from March. Meanwhile, 13% planned to

increase hiring, up 1 point. Finding qualified labor continues to be a challenge: the share of

firms reporting few or no qualified applicants was 46%, slightly higher than March. The

strength in the March anc April jobs report was not reflected in the NFIB indicators.

The former two categories – unfilled positions and hiring intentions – are, in our view, two

important signals about the health of labor market conditions. Hiring intentions have

rebounded modestly after their post-Liberation Day decline and remain broadly in line

with post-COVID averages. Hard-to-fill positions have been on the decline since COVID,

but the series remains above prior cycle peaks, indicating that qualified labor remains

scarce. We suspect this also has something to do with restrictive immigration policies that

have reduced the supply of labor and altered the mix of potential applicants.