NFIB Small Business Optimism Index Increased Slightly in February

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased 0.6 points in February to 90.9 but remains below the 49-year average of 98. Twenty-eight percent of owners reported inflation as their single most important business problem, up two points from last month. Owners expecting better business conditions over the next six months deteriorated two points from January to a net negative 47 percent.

“Small business owners remain doubtful that business conditions will get better in the coming months,” said Bill Dunkelberg, chief economist for NFIB. “They continue to struggle with historic inflation and labor shortages that are holding back growth. Despite their economic challenges, owners are working hard to create new jobs to strengthen the economy and their firms.”

Key findings include:

  • Forty-seven percent of owners reported job openings that were hard to fill, remaining historically very high.
  • The net percent of owners raising average selling prices decreased four points to a net 38 percent (seasonally adjusted).
  • The net percent of owners who expect real sales to be higher improved five points from January to a net negative 9 percent.

As reported in NFIB’s monthly jobs report, 60 percent of owners reported hiring or trying to hire in February. Of those hiring or trying to hire, 90 percent of owners reported few or no qualified applicants for their open positions.

Sixty percent of owners reported capital outlays in the last six months. Of those making expenditures, 40 percent reported spending on new equipment, 26 percent acquired vehicles, and 12 percent spent money for new fixtures and furniture. Eighteen percent of owners improved or expanded facilities and 6 percent acquired new buildings or land for expansion. Twenty-one percent plan capital outlays in the next few months.

Twenty percent of owners recently reported that supply chain disruptions still have a significant impact on their business. Another 33 percent reported a moderate impact and 34 percent reported a mild impact. Labor supply problems are widespread.

Seasonally adjusted, a net 46 percent of owners reported raising compensation. A net 23 percent plan to raise compensation in the next three months. Twelve percent of owners cited labor costs as their top business problem and 21 percent said that labor quality was their top business problem.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in February 2023.

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