NFIB’s April, 2015, Small Business Optimism Survey* rose 1.7 points from March to 96.9. NFIB described the improvement as “a decent month-over-month reading but overall still below the historical average.”
“Overall, the Index remains steady, but it is still a few points below the average and is showing no tendency to break out into a stronger pattern of economic growth. The little economic growth we do see is coming mostly from small businesses. Solid economic growth would require good performance from both big and small firms and that will likely be elusive this year.”
Bill Dunkelberg
NFIB Chief Economist
Hiring
Small businesses posted another decent month of job creation. Those that hired were more aggressive than those reducing employment, producing an average increase of 0.14 workers per firm, continuing a string of solid readings for 2015.
Inventories and Sales
The most significant problem that surfaced in the survey. Expected real sales volumes posted a 3 point decline, falling to a net 10 percent of owners expecting gains, after a 5 point decline in January and February and a 2 point decline in March. The 4 month downward trend does not bode well for economic growth in the small business sector. Overall, expectations are not showing a lot of strength.
Capital Spending
Sixty percent reported outlays, up 2 points in spite of the collapse of spending in energy and gas exploration.
Inflation
Fourteen percent of the NFIB owners reported reducing their average selling prices in the past 3 months (down 1 point), and 18 percent reported price increases (down 1 point). The economy has grown too slowly to support widespread price hikes.
Profits and Wages
Earnings trends posted an unexpected 6 point gain, posting a reading of a net negative 16 percent. Reports of increased labor compensation rose 1 point to a net 23 percent of all owners. Labor costs continue to put pressure on the bottom line but fuel prices are down a lot. A seasonally adjusted net 14 percent plan to raise compensation in the coming months (up 1 point).
Access to Credit
A historically low four percent of owners reported that all their borrowing needs were not satisfied, down 1 point. Loan demand remained historically weak.
“The small business growth engine appears to be accounting for more of the real growth (what little there is) as economic activity among the larger firms fades.”
Bill Dunkelberg
NFIB Chief Economist
*The NFIB Research Foundation has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in April 2015. A sample of 10,799 small business owners/members was drawn with 1,500 usable responses received for a response rate of 14%.from both sectors and that will be elusive this year.