Financial health of Main Street small- to medium-sized businesses (SMBs) has improved for four consecutive quarters, according to the latest edition of “The Main Street Index,” a PYMNTS and Melio collaboration based on a survey of 532 owners of Main Street SMBs.
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The Main Street Index provides a quarterly metric measuring the health of SMBs based on the growth in new establishments, real wages and employment.
The first-quarter 2022 Main Street Index now stands at 19% above its lowest score, which occurred at the height of the pandemic, and 6.2% above the last pre-pandemic reading.
It’s been a bumpy road over the last two years. The Main Street Index experienced its steepest decline in the earliest days of the pandemic when its score dropped over 10%. In the two quarters following, it recovered to its pre-pandemic level. Growth has stabilized over the last few quarters, and in Q1 2022, it returned to pre-pandemic trends.
Other signs suggest that chances of a full economic recovery are less than certain, however.
The wages these businesses pay their employees have fluctuated since the early days of the pandemic, but they have increased more than 9% above their Q4 2019 levels.
Main Street SMBs’ employment rates still trail, however, increasing only 4.5% compared to Q4 2019.
The Q1 2022 Main Street Index indicates that Main Street SMBs are continuing to rebuild, growing their businesses as the health crisis restrictions subside.
It also reflects SMBs’ vulnerability to factors such as growing inflation and regional differences in economic confidence.
With labor shortages expected to continue, employment has shown weaker trends than wages toward full recovery, and this may prove impactful for future index performance.