The NFIB's small business optimism index moved higher in April, rising by 1.7 points to 96.9. The reading came in above the consensus estimate, which called for the index to increase from 95.2 to 96.0.
This was an encouraging report. After a disappointing first quarter, small and medium businesses appear ready to turn the corner. The improvement in business sentiment in April follows in the footsteps of a Spring bounce-back in service sector activity and non-farm payrolls last week, and is another indication that the slowdown is behind us.
A deterioration in sales expectations sub-component was somewhat surprising, particularly as it runs counter to improved earnings outlook and a bounce-back in retail sales seen in March. This sub-component unlikely to reverse the decline in the near term, as household spending recovers from the winter slump and savings at the pump accumulate.
"Labor market indicators have all moved in the right direction this month. In addition to the uptick in the employment subcomponent and the gain in unfilled positions, the share of firms raising or considering raising worker compensation also ticked up. While for now wage gains remain modest, the ongoing tightening in the labor market suggests that wage growth momentum will continue." opines TD Economics
