By Xavier Fontdegloria
Optimism among small-business owners in the U.S. continued to rise in April on the reopening of the economy, with firms struggling to find workers to fill job openings and increasingly raising selling prices.
The NFIB Small Business Optimism Index came in at 99.8 in April, up 1.6 points from the previous month, data from a survey compiled by the National Federation of Independent Business showed Tuesday.
The reading is below the 101.1 expected by economists polled by The Wall Street Journal. The index increased for the third successive month and stands over its long-term average. However, it is still below the 104.5 level registered in February 2020, before the pandemic first hit the U.S.
"Small business owners are seeing a growth in sales but are stunted by not having enough workers," said NFIB Chief Economist Bill Dunkelberg.
The NFIB is a monthly snapshot of small businesses in the U.S., which account for nearly half of private sector jobs. Economists look to the report for a read on domestic demand and to extrapolate hiring and wage trends in the broader economy.
Seven of the 10 components that form the index improved in April, two decreased and one remained unchanged compared with the previous month.
The increase of the headline index was supported by better earning trends over the past three months, which increased by eight points to a net negative 7%. This indicator of profitability is running at historically strong levels, the report said.
Owners also reported more plans to invest in their businesses, with the percentage of those planning to make capital expenditures in the next three to six months increasing seven points to 27%.
The number of owners who view current inventory as 'too low' continued to increase to historically high levels, as it did the number of job openings that could not be filled.
"Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth," Mr. Dunkelberg said. Owners are raising compensation, offering bonuses and benefits to attract the right employees, he said.
Of owners surveyed, 24% selected the quality of labor as their top business problem.
The percentage of owners expecting better business conditions over the next six months fell seven points to a net negative 15%. "A more optimistic view would produce heavier investment spending," the report said.
In April, the percentage of respondents raising average selling prices increased 10 points to 36%, the highest reading in decades. "Owners are raising selling prices in frequencies not seen since the late 1970s and early 1980s, a period of our highest inflation rates in modern history," Mr. Dunkelberg said.
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(END) Dow Jones Newswires