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Forbes
14 hours ago
- Business
- Forbes
How Retail Weakness Is Skewing Small Business Optimism Data
It's not all gray skies. For now, the dark clouds are mostly over retail. (Photo by) Small business optimism looks weak, but worries are most pronounced among retailers. The April 2025 Small Business Optimism Index came in at 95.8, below the 51-year average of 98. The index, published monthly by the National Federation of Independent Business (NFIB), fell across all sectors tracked in the report: construction, manufacturing, retail, and services. The latest survey reflects responses collected during the first two weeks of April and captures small business owner expectations for hiring, investment, sales, and the broader economy. The overall optimism reading was down 1.6 percentage points from March. Retail business owners were the least optimistic, with an index reading of 93.7, according to a supplementary report published by NFIB on May 27. That is 6.4 points below January and the only sector to come in below the overall long-term average. Retailers also reported the weakest hiring plans, the most inventory complaints, and the most widespread supply chain disruptions. Many, if not all, of these concerns are tied to President Trump's tariffs on Chinese goods, which were announced on April 2. Only 10% of retail owners plan to hire, compared to 13% across all small businesses. Seventy-six percent of retailers say supply chain issues are affecting their business. Fourteen percent say their inventories are too low, the lowest of any sector. Even with those headwinds, a net 7% expect real sales to rise, which is better than the overall small business outlook. Construction, on the other hand, remains the most confident sector. Its index reading was 100.9, down 3.9 points from January but still the highest among all industries. More than half of construction businesses report unfilled job openings, and 20% plan to hire in the next three months. Labor remains the industry's top concern. Nearly a third of construction owners said finding qualified workers is their most pressing issue. That shortage is likely being made worse by the Trump Administration's immigration crackdown. About one in three construction workers is an immigrant, and nearly half of painters and drywall installers are foreign born. Manufacturing and services also declined but stayed above the overall long-term average. Manufacturing optimism fell the most of any industry, dropping 6.8 points. This came despite the Trump Administration's push to onshore production and strengthen domestic supply chains. Even so, manufacturers reported the strongest earnings trends and the best expectations for future sales. In the services sector, hiring plans actually increased slightly, and expectations for the economy were the second highest of any group. Despite the broader decline in optimism, 69% of all small business owners rated their business health as excellent or good. That was true across every industry. Finance (74%) led the way. Transportation came in last (just 60%). Tariffs may be weighing on confidence, but outside of retail, most small businesses still see a path forward. While the overall index is down, three of the four major sectors remain more optimistic than the historical trend. That said, retail's struggles aren't a sideshow. When including direct and indirect employment, such as supply chain workers, retail employs about 55 million Americans and contributes $2.2 trillion to the country's annual gross domestic product, according to the National Retail Federation. Even if tariffs are hitting retailers hardest for now, the ripple effects could spread quickly. A slowdown in retail hiring, investment, and consumer spending could drag down broader economic momentum in the months ahead. More from Forbes
Epoch Times
20-05-2025
- Business
- Epoch Times
SBA Overhauling Biden-Era Loan Program Following High Default Rates
The Small Business Administration (SBA) is overhauling a Biden-era lending initiative, citing its 'alarmingly high rates' of loan default, the agency said in a May 19 The Community Advantage Small Business Lending Company program was designed to issue 7(a) loans to 'underserved communities,' the SBA said. In the 7(a) loan program, the government offers loan guarantees to lenders, which allows the loan providers to advance credit to small businesses with special needs. The SBA blamed Community Advantage's high default rate on lax oversight of the program. 'Community Advantage generated a 7 percent default rate over the last 12 months—more than double that of the overall 7(a) loan portfolio,' it said. 'Additionally, the portfolio is disproportionately stressed, with multiple lenders generating early problem loan rates above 30 percent.' A problem loan refers to any loan that cannot be recovered from borrowers quickly. Related Stories 5/20/2025 5/16/2025 The SBA issued a moratorium prohibiting the expansion of the Community Advantage loan program effective immediately. In addition, the agency also issued a new standard operating procedure that will mandate lenders taking part in the program to meet 'prudent financial stability standards.' Existing lenders have to 'dramatically increase' their capital reserves to continue participating in the program. SBA administrator Kelly Loeffler called Community Advantage an example of the weaponization of government programs to 'tip the scale against deserving small businesses and toward preferred groups and political allies, even when it meant greater risk to American taxpayers.' Overhauling the Community Advantage program is one of the latest steps the SBA has taken concerning its 7(a) initiative. On April 22, the agency The previous administration had eliminated lender fees under 7(a). It also adopted underwriting standards that ended up allowing lenders to approve loans for underqualified borrowers. 'Predictably, the program saw a massive rise in defaults and delinquencies—which the agency was unable to cover due to decreased fee income,' the SBA said. 'By 2024, the 7(a) loan program had a negative cash flow of about $397 million—the first instance of negative cash flow in 13 years.' The SBA said it was restoring 'robust rules' to end such 'reckless lending' practices. Despite changes announced by the SBA, the Small Business Optimism Index fell by 1.6 points in April, the National Federation of Independent Business (NFIB) said in a May 13 According to NFIB chief economist Bill Dunkelberg, 'uncertainty continues to be a major impediment for small-business owners in operating their business in April, affecting everything from hiring plans to investment decisions.' 'While owners are still trying to fill a high number of current job openings, their outlook on business conditions is less supportive of future business investments,' he said. SBA Loan Boom While the SBA tightens policies regarding 7(a) loans, the issuance of these loans has skyrocketed under the Trump administration, the agency said in an April 17 'Since Jan. 20, 2025, SBA has approved over 1,120 7(a) loans for manufacturers with a total loan volume of $677 million,' the agency said. 'During the same period in 2021, SBA approved less than 650 7(a) loans for manufacturers with a total loan volume of $497 million. Nearly 99 percent of American manufacturers are considered to be small businesses.' In the first 90 days of the Trump administration, 7(a) loans for manufacturers were up 74 percent from the same period during the Biden administration. On March 10, the SBA announced a Made in America manufacturing initiative aimed at expanding access to capital for small businesses, cutting down $100 billion in regulations, and creating the necessary infrastructure to support the 'blue-collar boom.' This month, a group of bipartisan lawmakers introduced the Made in America Manufacturing Finance Act, aimed at strengthening small businesses in the country, the office of Sen. Joni Ernst (R-Iowa) said in a May 1 The bill seeks to raise the loan limit for 7(a) and 504 small-business manufacturing loans from the current $5 million to $10 million. The act 'provides small-business owners the capital they need to expand, modernize, and compete,' said Rep. Roger Williams (R-Texas). 'We must continue to support and empower the job creators who keep our communities thriving. Together, we will continue driving the America First agenda forward and creating an environment where the success of Main Street is a priority.'
Fibre2Fashion
15-05-2025
- Business
- Fibre2Fashion
US Small Business Optimism slips in April amid rising volatility: NFIB
US' Small Business Optimism Index fell by 1.6 points to 95.8 in April, marking the second straight month it remained below the 51-year average of 98, according to National Federation of Independent Business (NFIB). The Uncertainty Index dropped by four points to 92 but stayed significantly above the historical average of 68. The seasonally adjusted data showed that 34 per cent of business owners had unfilled job openings in April, a 6-point decline from March and the lowest since January 2021. The net per cent of owners expecting better business conditions fell 6 points from March to a net 15 per cent (seasonally adjusted), the lowest since last October. This component, along with unfilled job openings, contributed most to the Optimism Index's decline, NFIB said in a press release. In April, the NFIB Small Business Optimism Index dropped to 95.8 in US, below the 51-year average. Key concerns included labour quality and weak sales expectations. Job openings and capital investment plans declined, while inflation concerns eased. Despite ongoing uncertainty, more owners rated their business health as good or excellent. Profit trend improved slightly, signalling cautious optimism. The net per cent of owners expecting higher real sales volumes fell 4 points from March to a net negative 1 per cent (seasonally adjusted). This is the fourth consecutive month real sales expectations declined. A net negative 4 per cent (seasonally adjusted) of owners plan inventory investment in the coming months, down 3 points from March and the lowest reading in 11 months. Eighteen per cent (seasonally adjusted) plan capital outlays in the next 6 months, down 3 points from March. Nineteen per cent of small business owners identified labour quality as the single most important issue in April, unchanged from March, making it the top concern for the third month in a row. Meanwhile, 14 per cent cited inflation as their main challenge, down 2 points from March and the lowest level since September 2021, placing it third among key concerns. Thirteen per cent of small business owners rated the overall health of their business as excellent, marking a 2-point rise from the previous month, while 56 per cent described it as good, up 3 points. The share of owners reporting business health as fair declined by 4 points to 27 per cent, and those rating it as poor remained unchanged at 4 per cent. A seasonally adjusted 34 per cent of small business owners reported having job openings they could not fill in April, a 6-point decline from March. Among the 56 per cent of owners who were hiring or attempting to hire, 85 per cent said they received few or no qualified applicants. Looking ahead, a seasonally adjusted net 13 per cent of owners plan to create new jobs within the next three months, up one point from March, as per NFIB monthly jobs report. Labour costs reported as the single most important problem for business owners fell 3 points in April to 8 per cent. Seasonally adjusted, a net 33 per cent reported raising compensation, down 5 points from March. A seasonally adjusted net 17 per cent plan to raise compensation in the next three months, down 2 points from March. The frequency of reports of positive profit trends was a net negative 21 per cent (seasonally adjusted), 7 points better than in March and the highest reading since March 2023. Among owners reporting lower profits, 38 per cent blamed weaker sales, 14 per cent cited usual seasonal change, 11 per cent blamed the rise in the cost of materials, 9 per cent cited the price change of their product or service, and 8 per cent cited labour costs. 'Uncertainty continues to be a major impediment for small business owners in operating their business in April, affecting everything from hiring plans to investment decisions,' said Bill Dunkelberg, chief economist at NFIB. 'While owners are still trying to fill a high number of current job openings, their outlook on business conditions is less supportive of future business investments.' Fibre2Fashion News Desk (SG)
The Hill
13-05-2025
- Business
- The Hill
Small business optimism declines: Survey
Small business optimism dipped in April for the fourth month in a row, according to the monthly National Federation of Independent Business (NFIB) survey released Tuesday. April was also the second consecutive month in which the small business optimism index fell below the 51-year average of 98, in the poll of small business owners. In April, the index declined by 1.6 percentage points to 95.8. The index came in at 97.4 in March; 100.7 in February; 102.8 in January; 105.1 in December 2024; 101.7 in November 2024. From mid-2022 to October 2024, the index hovered between the high-80s and low-90s. The survey asks small business owners a series of questions to gauge the economic conditions and economic sentiment among business owners. The index includes 'hard' components, including job creation plans, job openings, inventory plans, earnings and capital expenditure plans; and 'soft' components, such as expected business conditions, outlook for expansion, expected real sales, expected credit conditions and inventory satisfaction. The decline in the optimism index was driven in large part by the six-point drop in small business owners' expected business conditions and the six-point drop in unfilled job openings. The share of small business owners expecting better business conditions in six months fell from a net 21 percent in March to a net 15 percent in April — the lowest point since October 2024. In April, 34 percent of business owners reported having job openings they couldn't fill. The last time the level was this low was in January 2021, during the COVID-19 recession. The uncertainty index also fell in April to 92, down from 96 in March, but it remains well above the historical average of 68. 'Uncertainty continues to be a major impediment for small business owners in operating their business in April, affecting everything from hiring plans to investment decisions,' NFIB chief economist Bill Dunkelberg said in a statement. 'While owners are still trying to fill a high number of current job openings, their outlook on business conditions is less supportive of future business investments,' Dunkelberg continued.
Epoch Times
13-05-2025
- Business
- Epoch Times
Small Business Confidence Slides as Investment Plans Slip to 5-Year Low
Small business optimism continued to decline in April, with fewer owners expecting business conditions to improve and investment plans falling to their lowest level since the early days of the pandemic, according to new survey data from the National Federation of Independent Business (NFIB). The NFIB's Small Business Optimism Index dropped 1.6 points to 95.8, marking the fourth straight month of declines and the second month in a row below the 51-year average of 98, according to the NFIB report, published on May 13. The report paints a picture of a Main Street economy gripped by uncertainty, as inflationary pressures ease but investment, hiring, and expansion plans remain subdued amid lingering concerns over labor quality, taxes, and shifting trade policy. 'Uncertainty continues to be a major impediment for small business owners in operating their business in April, affecting everything from hiring plans to investment decisions,' NFIB chief economist Bill Dunkelberg said in a statement. 'While owners are still trying to fill a high number of current job openings, their outlook on business conditions is less supportive of future business investments.' Eighteen percent of owners said they plan capital outlays in the next six months, down three points from March and the lowest share since April 2020, when COVID-19 lockdowns froze much of the economy. The decline in planned investment comes even as some cost pressures begin to recede, suggesting that broader uncertainty, not just inflation, is holding businesses back. Labor quality remained the top concern for the third straight month, followed closely by taxes and government red tape. 'Renewal of the Tax Cuts and Jobs Act (TCJA) remains a major source of uncertainty,' NFIB stated in comments on the survey findings. 'Nearly 1 in 10 owners view government regulations and red tape as their top business problem, a form of taxation in which the government directs the expenditure of resources for compliance.' Related Stories 5/5/2025 4/9/2025 One day before the NFIB report was released, the House Ways and Means Committee Meanwhile, inflation appears to be fading as the most urgent issue for small firms, per the NFIB report. Fourteen percent of owners identified inflation as their single most important problem—the lowest reading in over three years. A net 25 percent reported raising selling prices in April, down from 26 percent in March, while 28 percent expect to raise prices in the next three months, down two points from the prior month. 'Actual inflation is low, although not quite at the Fed's goal of 2 percent,' NBIF said in comments on the report. 'But prices are still rising, and what owners want to see is a reversal of the cumulative 20 percent increase in prices under the Biden administration.' The NFIB report came on the same day the latest Consumer Price Index (CPI) data This cooling of price pressures, paired with slowing shelter costs and easing tariff risks, could clear the way for Federal Reserve rate cuts later in the year, according to ING analysts. 'The housing and services story can help to mitigate the inflation threat from tariffs, which itself is less of a concern in the wake of the recent cooling of tensions with China,' ING analysts wrote in a The United States and China have agreed to a 90-day deal to significantly reduce reciprocal tariffs as part of an effort to ease trade tensions, officials from both countries The temporary truce follows talks in Switzerland amid ongoing disputes over intellectual property theft by Chinese actors, ongoing trade imbalances that disfavor the United States, and China-made chemical precursors used to make the deadly drug fentanyl that continues to pour into U.S. communities. 'While the de-escalation of trade tensions is helpful for growth, it also makes it more likely that inflation will be less of an issue for the Federal Reserve and the scope for Fed rate cuts remains,' ING analysts wrote, while predicting that the Fed will deliver a 25-basis point cut at its September meeting. The NFIB noted that any tariff relief will be a welcome development for small businesses because, while few of them export goods, many rely heavily on imported inputs. Despite easing inflation and a temporary trade truce, small business sentiment remains cautious. The NFIB's Uncertainty Index dipped to 92 in April, down four points from March, but remained well above its historical average of 68. 'Overall, the economy is not in bad shape for now, time will tell what happens next,' NFIB said in commentary. 'For the next few months, owners will be watching the news to monitor progress toward passage of 'one big beautiful bill.'' The Ways and Means Committee was set to begin marking up the bill on Tuesday, with small business owners likely to track developments closely in terms of tax policy, which was the top problem in the NFIB survey for 16 percent of respondents.
