Consumer Payment Card News

Real Economy Optimism Driven by U.S. Small Biz in Apr

The real economy optimism was driven higher by U.S. small business owners who cite strong job creation, expectations for sales, business conditions, and credit conditions as the underlying reasons. The latest data show small business owners have largely recovered from the impact of the “Trump Shutdown,” nasty winter weather nationwide, and interest rate concerns.

Small Business Optimism

According to the April NFIB Small Business Optimism Index, economic optimism increased 1.7 points to 103.5. Sales improved in April, the inventory soft spot seen in last month’s report rebounded, and profit trends posted a very solid advance. About 9% of all owners reported higher nominal sales in the past three months, a four-point improvement, and the net percent of owners expecting higher real sales volumes rose one point to 20% of owners.

Small Business Pulse

The National Federation of Independent Business owners (NFIB) noted one-fourth of owners cited the difficulty of finding qualified workers as their single most important business problem. Fifty-seven percent reported hiring or trying to hire, but 86% of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill. Thirty-eight percent of all owners reported job openings they could not fill in the current period, down one point from the record high. Overall, reports of rising compensation are holding at historically high levels, with reports of higher worker compensation rising one point to a net 34% of all firms.

The April NFIB report found 4% of owners reported all their borrowing needs were not satisfied, up 1 point and historically very low. Thirty-two percent reported all credit needs met and 51% said they were not interested in a loan, unchanged. Four percent reported their last loan was harder to get than the previous one, down 2 points and historically low. Two percent reported that financing was their top business problem. The percent of owners reporting paying a higher rate on their most recent loan was down 4 points to 13%. Thirty-one percent of all owners reported borrowing on a regular basis (down 3 points). The average rate paid on short maturity loans rose 60 basis points to 6.7%.

U.S. Consumer Pulse

The Conference Board Consumer Confidence Index increased in April after ticking down in March. Consumers’ stating business conditions are “good” increased from 34.7% to 37.3%, while those saying business conditions are “bad” decreased from 12.4% to 11.7%. Consumers’ stating jobs are “plentiful” increased from 42.5% to 46.8%, while those claiming jobs are “hard to get” decreased from
14.3% to 13.2%.

Consumers’ short-term outlook also improved in April. The percentage of consumers expecting business conditions will be better six months from now increased from 17.2% to 19.9%. The proportion expecting more jobs in the months ahead increased from 16.8% to 17.2%, while those anticipating fewer jobs decreased from 14.3% to 13.2%.