NFIB Small Business Optimism Index Continues to Trend Lower in February

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its latest Small Business Optimism Index (SBOI). The February SBOI declined further to a reading of 89.4, marking the twenty-sixth consecutive month that the index has been below the 49-year average of 98. The last time the Index was at or above the average was December 2021.

In February, 23% of small business owners reported inflation as the single most important problem for their business operations.

Other highlights of the SBOI report include the following:

  • Reports of labor quality as the single most important problem for business owners decreased 5 points to 16%, the lowest reading since April 2020.
  • The net percentage of owners who expect real sales to be higher increased 6 points from January to a net negative 10% (seasonally adjusted), an improvement from January’s report.
  • Small business owners’ plans to fill open positions continued to slow, with a seasonally adjusted net 12% planning to create new jobs in the next 3-months—the lowest level since May 2020.
  • Seasonally adjusted, 37% of all owners reported job openings they could not fill in the current period, down 2 points from January and the lowest reading since January 2021.
  • The net percent of owners raising average selling prices declined 1 point from January to a seasonally adjusted net 21%, the lowest since January 2021.

Commenting on the results of the February SBOI, NFIB Chief Economist Bill Dunkelberg said:

“While inflation pressures have eased since peaking in 2021, small business owners are still managing the elevated costs of higher prices and interest rates. The labor market has also eased slightly as small business owners are having an easier time attracting and retaining employees.”

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