Fiserv has released the latest Fiserv Small Business Index™ for April 2024 which highlights the shift in consumer spending, showing increased sales at retail and service businesses while discretionary spend slowed down. Nationally, the seasonally adjusted Small Business Index increased four points to 145. Small business sales grew +5.6% year-over-year and 2.2% month-over-month.
On a national scale, small business retail sales rebounded nicely from a sluggish March, the index states. 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.
A Shift in Consumer Spending
Consumer priorities shifted significantly toward service spending in April, according to the index. 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, the index states. 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, according to the index.
Food Services and Drinking Places saw sales growth significantly 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 index states. 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.
