The NIFB small business optimism for the first time in 2024 at 89.7 in April after 88.5 in March. The reading is stronger than the consensus of 88.3 in the Econoday survey of forecasters. The NFIB said the index remains below the 50-year average of 98 for the 28th consecutive month. The index improved despite greater uncertainty about the economy. The uncertainty index is up to 78 in April after 77 in March and the highest since 79 in September 2023.

In April, 7 of the 10 index components are higher and 3 are lower. The largest positive is a 6 point rise in expectations for higher sales to minus 12 percent in April, the highest since minus 4 percent in December 2023. The next highest increase is a rise of 3 points to 40 percent in April which points to small businesses expecting to need more workers soon. The largest decrease is a dip of 4 points in now is a good time to expand at 4 percent in April which reflects the increased uncertainty about the economy while inflation measures point to a stall in disinflation and the Fed remains on hold for interest rates.

Among survey respondents, 22 percent said inflation is their single most important problem followed by 19 percent citing the quality of labor and 11 percent the cost of labor. Small businesses are anxious as the end of the current inflation episode while greatly improved is not yet over. Fed policymakers will have to consider how to regain traction in the inflation fight after the first quarter 2024 showed little or no underlying progress.

With 50 years of data, the small business optimism index has been below the historical average of 98 since January 2022. April's consensus is 88.3 versus 88.5 in March.

The small business optimism index is compiled from a survey that is conducted each month by the National Federation of Independent Business (NFIB) of its members. The index is a composite of 10 seasonally adjusted components based on the following questions: plans to increase employment, plans to make capital outlays, plans to increase inventories, expect economy to improve, expect real sales higher, current inventory, current job openings, expected credit conditions, now a good time to expand, and earnings trend.

Small businesses are responsible for a majority of new job creation and the NFIB focuses on this sector of the economy. The direction of the health of small businesses can portend changes in the stock market - especially small caps.