The NFIB Small Business Optimism Index experienced a decline of 2.1 points in February, settling at 100.7. Despite this drop, the index remains above its 51-year average of 98 for the fourth consecutive month. The current figure is also 4.4 points below the recent peak of 105.1 recorded in December.
"Uncertainty is high and rising on Main Street, and for many reasons," stated NFIB Chief Economist Bill Dunkelberg. He noted that expectations for better business conditions over the next six months have decreased among small business owners, as has the percentage who view this period as a good time to expand their businesses.
The Uncertainty Index increased by four points to reach 104, marking it as the second-highest reading recorded.
Key findings from the report include:
- A net decrease of ten points in owners expecting economic improvement since January.
- Only twelve percent see it as a good time to expand, a five-point drop from January.
- Inflation was cited by sixteen percent of owners as their primary issue, down two points from January.
- The percentage of owners raising average selling prices rose by ten points to a net thirty-two percent.
- Labor costs were identified as a significant problem by twelve percent of respondents, up three points from January.
Additionally, reports show that thirty-eight percent of small business owners had job openings they could not fill in February—an increase from January and the highest since August 2024.
The survey introduced a new question regarding business health evaluations: eleven percent rated their business health as excellent, fifty-five percent as good, twenty-seven percent as okay, and six percent reported it as bad.
NFIB's monthly jobs report revealed that fifty-three percent of owners attempted hiring in January; however, eighty-nine percent faced challenges finding qualified applicants. Plans to create new jobs fell by three points to fifteen percent for the upcoming three months.
Labor quality emerged as the top concern for nineteen percent of small business owners while labor costs rose slightly but remained below previous highs.
Capital outlays were reported unchanged with fifty-eight percent making expenditures over six months; future plans dropped slightly to nineteen percent planning outlays soon.
Sales trends showed mixed results with some experiencing lower nominal sales yet others anticipating higher real sales volumes despite declines over two consecutive months post-election surge levels earlier this year
The frequency reporting positive profit trends was marginally worse than last month due largely attributed weak sales seasonal changes material cost increases offsetting gains through improved sales volumes seasonal adjustments price hikes respectively
Finally loan accessibility appeared stable compared past attempts although financing interest rates remained minor issues according surveyed participants conducted February
