US small business optimism improves, but owners remains downbeat

Optimism among small businesses in the US has increased for the first time this year, but still remains well below the long-term average as inflation continues to weigh on confidence.

According to the National Federation of Independent Business (NFIB), the Small Business Optimism Index rose by 1.2 points in April to 89.7, as the sales outlook and job-creation expectations both improved.

The headline reading was ahead of the consensus forecast of 88.1 but the 28th straight month below the 50-year average of 98. March's reading of 88.5 was the lowest level in more than 12 years.

“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, the chief economist at the NFIB.

Some 22% of business owners said that inflation was the biggest issue facing their business in April. While this was down three points from March, it remained the number-one problem.

“Overall, small business owners remain historically very pessimistic as they continue to navigate these challenges. Owners are dealing with a rising level of uncertainty but will continue to do what they do best – serve their customers," Dunkelberg said.

A net negative 12% of owners said they expect real sales to be higher in April, up six points from March, while a net positive 12% were planning to create new jobs in the next three months, up one point from March's near-four-year low.