The National Federation of Independent Business (NFIB) released its Small Business Optimism Index for February, showing a decline of 2.1 points to 100.7. This marks the fourth month the index has remained above the 51-year average of 98, although it is still 4.4 points below its recent peak in December.
Bill Dunkelberg, NFIB Chief Economist, noted that “uncertainty is high and rising on Main Street,” with small business owners less optimistic about future business conditions and fewer seeing it as a good time to expand. Inflation continues to be a significant concern, ranking second only to labor quality issues.
In North Dakota, state director Don Larson emphasized that inflation impacts local businesses, particularly with price increases in the agriculture sector reaching 45%. He urged legislative action on property taxes and other measures to reduce business costs.
Key findings from the report indicate a ten-point drop in the net percentage of owners expecting economic improvement, now at a net negative 37%. Only 12% believe it’s a good time to expand their businesses—a notable decrease since January. Meanwhile, inflation concerns have slightly decreased but remain just behind labor quality as the top issue for small businesses.
Price hikes are anticipated by many owners; a net 29% plan such increases within three months—the highest level in nearly a year. Reports show labor costs as an increasing problem at 12%, near historic highs.
Employment remains challenging, with a seasonally adjusted 38% of small business owners unable to fill job openings—up three points from January—and many citing few qualified applicants for available positions.
In terms of financial health assessments introduced this month by NFIB: 11% rate their business health as excellent; most consider it good or okay; while only a small fraction see it negatively.
Despite these challenges, some positive trends were reported: capital outlays have remained steady with more than half of owners investing in new equipment or facilities over six months. However, sales figures and inventory levels continue to struggle amid uncertain market conditions.
The NFIB’s monthly survey data collection spans back several decades and provides valuable insights into small business economic trends across various sectors nationwide.
