Small business sales grew 5.6% year over year and 2.2% month over month, according to the Fiserv Small Business Index for April 2024, an indicator of the performance of small businesses in the United States at national, state and industry levels. Nationally, the seasonally adjusted Fiserv Small Business Index increased 4 points to 145.
“Consumer spending shifted significantly in April, with appreciable gains in service-based business spending, which includes professional services such as tax preparation, offsetting a slowdown in discretionary spending,” Prasanna Dhore, chief data officer at Fiserv, said. “Retail was also a bright spot in April, with small retailers seeing 7.7% year-over-year sales increases compared to 2023.”
Retail Rebounds from March, Household-Related Subsectors Lead the Way
Nationally, small business retail sales rebounded from a sluggish March. Sales grew 1.6% month over month and 7.7% year over year. Most retail subsectors experienced strong month over month increases, including furniture (+4.9%), building materials (+3.8%), motor vehicle parts (+4.4%) and gas stations (3.1%). For these destinations, the year-over-year trajectory was similarly strong.
Service-Based Business Spending Grows Across Sectors
Consumer priorities shifted significantly toward service spending in April. Professional, scientific and technical services saw a 7% increase over March and a 16.4% increase year over year. With the IRS tax filing deadline falling within April, demand spiked for bookkeeping and accounting, along with other related business services. Large and small construction projects also drove demand for small business architectural, engineering and surveying services.
Spending at specialty trade contractors grew 4.1% month over month and 4% year over year. Seasonal demand for swimming pool services, concrete/masonry contractors and heating/cooling specialists drove the gains.
Consumers Back Off Discretionary Spending
Small businesses that capture discretionary spend, including restaurants, businesses focused on travel and recreational activities and select retail businesses, such as clothing retailers, did not perform as well in April as in recent months.
Food services and drinking places, specifically, saw sales growth slow as consumer demand for lower-priced food options increased. Restaurant spending shrank 3.1% compared to March and was off 0.2% from April 2023. The reduction in restaurant foot traffic was much less significant, indicating that consumers are still visiting restaurants but ordering less expensive items or choosing lower-cost establishments.
