May 12, 2021 - Economy

Optimism rises among small business owners even as many struggle to hire

Small business optimism index
Data: NFIB; Chart: Axios Visuals

Small business owners' optimism improved during April, even as many struggled to fill open positions.

Why it matters: Small businesses were hit hard with closures at the beginning of the pandemic, and an uneven recovery has proved that business owners still face a mountain of uncertainty.

The details: The NFIB Small Business Optimism Index increased 1.6 points in April, to 99.8, from a month before.

  • The index is up from a reading of 95 in January, but down from 104 in the fall.
  • The reading is about 2 points above the historical average.

The labor picture appears to be improving, but slowly. Firms surveyed hired an average of 0.31 workers over the past few months.

What they're saying: "Small business owners are seeing a growth in sales but are stunted by not having enough workers. Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth," says Bill Dunkelberg, the group's chief economist.

  • "Owners are raising compensation, offering bonuses and benefits to attract the right employees."

Yes, but: 44% (seasonally adjusted) of all owners reported being unable to fill job openings, up 2 percentage points from March.

  • About 8% cited labor costs as their top business problem, and 24% said that labor quality was their top problem.

Inflation watch: Businesses are raising prices at a rate not seen since the early 80s. A net 36% of small business owners are hiking prices, up 10 points over March (seasonally adjusted).

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