The National Federation of Independent Business (NFIB) Small Business Optimism Index fell by 2.1 points in February to 100.7. The Uncertainty Index rose four points to 104 – the second highest recorded reading.
“Uncertainty is high and rising on Main Street, and for many reasons,” said NFIB Chief Economist Bill Dunkelberg, chief economist for NFIB. “Those small business owners expecting better business conditions in the next six months dropped and the percent viewing the current period as a good time to expand fell, but remains well above where it was in the fall. Inflation remains a major problem, ranked second behind the top problem, labor quality.”
Key findings include:
- The net percent of owners expecting the economy to improve fell ten points from January to a net 37 percent (seasonally adjusted).
- Twelve percent (seasonally adjusted) of owners reported that it is a good time to expand their business, down five points from January. This is the largest monthly decrease since April 2020.
- Sixteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from January and now just below labor quality as the top issue.
- The net percent of owners raising average selling prices rose 10 points from January to a net 32 percent (seasonally adjusted). This is the largest monthly increase since April 2021, and the third highest in the survey’s history. The percent of owners lowering their prices is 10 points lower than it was one year ago.
- Labor costs reported as the single most important problem for business owners rose three points to 12 percent, only one point below the survey’s highest reading of 13 percent reached in December 2021. The last time labor costs ranked this high was in February 2023.
This month, NFIB introduced a new question to the survey to better understand how small business owners evaluated the overall health of their business. Eleven percent of owners reported the health of their business as excellent, 55 percent reported it as good, 27 percent reported it as okay, and 6 percent reported bad.
As reported in NFIB’s monthly jobs report, a seasonally adjusted 38 percent of all small business owners reported job openings they could not fill in February, up three points from January and the highest reading since August 2024. Of the 53 percent of owners hiring or trying to hire in January, 89 percent reported few or no qualified applicants for the positions they were trying to fill.