The National Federation of Independent Business (NFIB) Small Business Optimism Index fell 0.2 points in January to 99.3 and remained above its 52-year average of 98. Of the 10 Optimism Index components, three increased and seven decreased. Expected real sales volume was the only component with substantial change, increasing by 6 points. The Uncertainty Index rose 7 points from December to 91. A rise in owners reporting uncertainty about whether it is a good time to expand their business was the primary driver of the rise in the Uncertainty Index.
Key findings include:
- In January, 13 percent reported the cost or availability of insurance as their single most important problem, up 4 points from December. The last time insurance reached this percentage was December 2018.
- In January, 16 percent of small business owners cited labor quality as their single most important problem, down 3 points from December. This is the third consecutive month that labor quality reported as the single most important problem, has declined.
- The net percent of owners expecting higher real sales volumes over the next quarter rose 6 points from December to a net 16 percent (seasonally adjusted).
- The net percent of owners reporting inventory gains rose 4 points to a net 3 percent (seasonally adjusted), the highest reading since January 2023. Not seasonally adjusted, 14 percent reported increases in stocks (up 1 point), and 17 percent reported reductions (up 2 points).
- In January, 62 percent of small business owners reported that supply chain disruptions were affecting their business to some degree, down 2 points from December. Four percent reported a significant impact (up 1 point), 17 percent reported a moderate impact (down 4 points), 41 percent reported a mild impact (up 1 point), and 37 percent reported no impact (up 2 points).
- The net percent of owners raising average selling prices fell 4 points from December to a net 26 percent (seasonally adjusted). Price increases remain well above the historical average of a net 13 percent, suggesting continued inflationary pressure. Looking forward to the next three months, a net 32 percent (seasonally adjusted) plan to increase prices, up 4 points from December.
- In January, overall reported business health improved from December, with more reporting it as excellent and fewer reporting it as fair. When asked to evaluate the overall health of their business, 14 percent rated it as excellent (up 5 points), 54 percent rated it as good (unchanged), 27 percent rated it as fair (down 7 points), and 4 percent rated it as poor (up 1 point).
As reported in NFIB’s monthly jobs report, a seasonally adjusted 31 percent of all small business owners reported job openings they could not fill in January, down 2 points from December. Unfilled job openings remain above the historical average of 24 percent. Of the 50 percent of owners hiring or trying to hire in January, 88 percent reported few or no qualified applicants for the positions they were trying to fill. A seasonally adjusted net 16 percent of owners plan to create new jobs in the next three months, down 1 point from December.
View the full report here.