U.S. small business optimism eases in April, NFIB index falls to 90.9

U.S. small business optimism eased in April. The NFIB’s small business optimism index fell 5.5 points to 90.9 in April. Today’s data is above consensus expectations of a print of 83. The falls were widespread, with nine of the 10 subcomponents dropping on the month. Pull-backs were led by real sale expectations, which dropped 30 points to -42 percent, the lowest reading in the survey’s history. This was followed by falls in earning trends, the share of firms with hard-to-fill job openings, and business owners recording now is a good time to expand.

Bucking the trend was the percent of companies expecting the economy to rebound in the coming six months. This specific subcomponent rose 24 points to 29 percent in April, more than reversing the previous months’ 17 points fall.

The share of companies planning to increase employment dropped 8 points to 1 percent. Similarly, worker compensation metrics dropped on the month with the share of companies reporting a rise in worker compensation over the last three months falling by 15 points to 16 percent, while those with plans to do so dropped 9 points to 7 percent.

After a sharp rise in the previous month, the uncertainty index dropped 17 points to 75, reflecting the perception that most business owners are now convinced that the economy will weaken in the near-term, noted TD Economics in a research report.

“On the brighter side, more business owners are now expecting economic conditions to improve in the medium-term, with several states beginning to ease virus-containment orders. Many of the states that have started to lift such orders have prioritized the reopening of non-essential small businesses with small headcounts. As more small businesses are allowed to resume their operations and more workers are called back, we could start seeing some improvement in small business morale in the months ahead”, added TD Economics.