Small businesses see sales gains in April, discretionary spending dips

Small businesses saw increased sales last month, rebounding from a “sluggish” March.

According to the Fiserv Small Business Index for April 2024, small business sales grew 5.6% year-over-year (YoY), and 2.2% month-over-month (MoM). The seasonally adjusted index increased four points to 145. 

For small business retailers, sales grew 1.6% MoM and 7.7% YoY. Most retail subsectors experienced strong MoM increases from March to April, including Furniture (+4.9%), Building Materials (+3.8%), Motor Vehicle Parts (+4.4%) and Gas Stations (3.1%). For these destinations, the YoY trajectory was similarly strong.

“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,” said Prasanna Dhore, chief data officer at Fiserv. “Retail was also a bright spot in April, with small retailers seeing 7.7% YoY sales increases compared to 2023.”

Consumer spending priorities changed significantly toward service spending in April. Professional, Scientific, and Technical Services saw a 7.0% increase over March and a 16.4% increase YoY. 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% MoM and 4.0% YoY. Seasonal demand for swimming pool services, concrete/masonry contractors, and heating/cooling specialists drove the gains for the sector in April.

Small businesses that capture discretionary spend, including restaurants and 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 decreased 3.1% compared to March and was off 0.2% YoY. Fiserv says 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.