The NFIB Small Business Optimism Index decreased by 0.2 points in January, reaching 99.3 but staying above its 52-year average of 98. The index is based on ten components, three of which increased while seven declined during the month. The most notable change was in expected real sales volume, which rose by six points. The Uncertainty Index also increased by seven points to 91, mainly due to more business owners expressing uncertainty about whether it is a good time to expand.
“While GDP is rising, small businesses are still waiting for noticeable economic growth,” said NFIB Chief Economist Bill Dunkelberg. “Despite this, more owners are reporting better business health and anticipating higher sales.”
“Optimism among Arkansas’ small business community is steady,” said NFIB State Director Katie Burns. “It is important lawmakers prioritize policies and reforms that strengthen and sustain our state’s workforce and economy.”
A new feature in this report is the NFIB Small Business Employment Index, which combines several jobs-related questions into a single figure. In January, the index stood at 101.6—about 1.5 points above its historical average—indicating a balanced labor market.
Other findings from the January survey include an increase in concerns over insurance costs or availability, cited as the main issue by 13% of respondents—the highest since December 2018. Capital outlays were reported by 60% of owners over the past six months, marking the highest level since November 2023.
Credit conditions appeared to improve slightly for small businesses: only a net negative 6% reported paying higher interest rates on their latest loan compared to previous attempts, down three points from December.
Labor quality remained a concern but showed improvement for the third consecutive month; only 16% listed it as their top problem, down three points from December. This issue was most prominent in construction, manufacturing, and professional services sectors.
Expectations for higher real sales volumes improved as well; a net 16% expect increases in the next quarter—a rise of six points from December. Inventory gains also reached their highest seasonally adjusted reading since January 2023.
Supply chain disruptions continued to affect businesses but have eased slightly; 62% reported some impact in January compared to December's figures.
Inflationary pressures persisted with a net 26% of owners raising selling prices—still above the long-term average—and a net 32% planning price hikes over the next three months.
Business health ratings showed improvement: more owners rated their situation as excellent (14%, up five points), while fewer described it as fair (27%, down seven points).
Regarding hiring challenges, unfilled job openings remain above historical averages despite a slight decrease; seasonally adjusted figures show that a net 16% plan to create new jobs soon.
Plans for capital expenditures in the next six months fell slightly to a seasonally adjusted rate of 18%, indicating cautious optimism about future investments.
Taxation remained the top problem for small business owners at 18%, followed by labor quality and inflation concerns at lower levels than previous months.
The monthly survey data was collected from randomly selected members of NFIB during January and forms part of an ongoing research effort that has been running quarterly since late 1973 and monthly since 1986.
