The National Federation of Independent Business (NFIB) Small Business Optimism Index registered a modest gain in April, inching up by 0.1 points to 95.9. This marks the second consecutive month the index has remained below its 52-year average of 98.0. Concurrently, the NFIB Uncertainty Index saw a decrease of 4 points, settling at 88, though it still sits above its historical benchmark. Logan Shine, NFIB Iowa State Director, observed that small business optimism in Iowa is largely stagnant, with inflation and escalating gas prices significantly impacting sales and impeding business stability.
Inflation and Labor Challenges Persist
NFIB Chief Economist Bill Dunkelberg highlighted that inflationary pressures continue to be a substantial hurdle for businesses nationwide. Labor quality emerged as the paramount concern for 18% of surveyed owners, a 3-point rise from March and exceeding the historical average. Labor costs were also a significant concern for 9% of owners. Reflecting these issues, the NFIB Small Business Employment Index declined for the second consecutive month, falling 1.2 points to 100.4. While 53% of owners reported hiring or attempting to hire, a considerable 46% struggled with a lack of qualified applicants for open positions. Looking forward, a net 13% of owners anticipate creating new jobs in the upcoming three months.
Deteriorating Sales and Price Pressures
Price pressures intensified in April, with a net 30% of owners reporting increases in average selling prices, a figure notably above the historical average. Furthermore, 27% of owners plan to raise prices in the next quarter. Inflation was identified as the third most significant business challenge by 16% of owners, trailing only labor quality and taxes. Sales trends showed weakness, with a net negative 8% of owners reporting higher nominal sales over the past three months. The net percentage expecting higher real sales volumes in the next quarter dropped to 3%, its lowest point in a year.
Weakening Business Outlook and Profitability
Expectations for future business conditions also deteriorated. The net percentage of owners anticipating improvement fell to 4%, marking the fourth consecutive monthly decline and reaching its lowest level since October 2024. Only 7% of owners considered April a favorable time to expand their businesses, also the lowest figure recorded since October 2024. Positive profit trends saw a decrease, with a net negative 19% reported. Owners cited weaker sales, seasonal factors, and rising material costs as reasons for lower profits. Supply chain disruptions continued to affect 64% of small businesses to varying degrees.
Credit conditions saw the average interest rate on short-maturity loans at 8.3% in April. Regular borrowing was reported by 22% of owners, the lowest figure since November 2021. Capital outlays remained stable, but actual capital expenditure levels have decreased since the year’s start and are below the historical average. When assessing their overall business health, 12% of owners rated it as excellent, 55% as good, 29% as fair, and 4% as poor. The survey data was collected in April 2026 from NFIB’s membership.
