Record Number Of Small Businesses Not Expecting Better Business Conditions

Insights | Record Number Of Small Businesses Not Expecting Better Business Conditions
Optimism pessimism sign post

Author: David I. Templeton, CFA, Principal and Portfolio Manager

The National Federation of Independent Businesses (NFIB) reported no change in the Small Business Optimism Index for April, remaining at 93.2. Broadly, the components of the index showed further weakness. In the second chart below, of the ten key index components, five were down, two up and three unchanged.

NFIM Small Business Optimism Index April 2022
NFIB April 2022 Components

A part of the survey ask businesses if they expect business conditions to be better or worse over the next six months. In the report for April, small business owners expecting better business conditions over the next six months decreased to a net negative 50%, the lowest level recorded in the 48-year history of the survey. The other area continuing to show concern for business owners is their view on inflation. 32% of respondents reported their single most important problem was inflation, the highest reading since 1980.

NFIB April 2022, inflation, selling prices, business outlook

With small business optimism running at a low 93.2, and businesses having a poor view on their prospects looking out six months, this can be indicative of weaker overall economic activity. The recently reported -1.4% advanced reading on real GDP in the first quarter is certainly reflective of the dim view held by small businesses.

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