Small Business Optimism Declined in April for 2nd Consecutive Month
Washington, DC, May 12, 2020-Small business optimism took another dive in April, falling 5.5 points to 90.9, with owners expressing certainty the economy will weaken in the near-term, but expecting it to improve over the next six months, according to the National Federation of Independent Business (NFIB).
The Optimism Index has fallen 13.6 points over the last two months, with nine of ten Index components declining in April and one improving.
“The impact from this pandemic, including government stay-at-home orders and mandated non-essential business closures has had a devasting impact on the small business economy,” said NFIB chief economist William Dunkelberg. “Owners are starting to benefit from the PPP and EIDL small business loan programs as they try to reopen and keep employees on staff. Small business owners need more flexibility, though, in using the PPP loan to support business operations and liability protection so that all these efforts to support small businesses are not ultimately lost in costly litigation.”
Spotlighting small business owners’ need for more flexibility is that real sales expectations in the next three months declined 30 points to a net negative 42%, the lowest reading in the survey’s 46-year history. The second-lowest reading was net negative 24% in April 1980. A net negative 11% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down 19 points from March.
The NFIB Uncertainty Index fell 17 points in March to 75, with most owners quite certain that the economy will weaken in the near-term. However, reports of expected better business conditions in the next six months increased 24 points, rebounding from a 17-point decline in March. Owners’ optimism about future conditions indicates they expect the recession to be short-lived.