NFIB Small Business Optimism Index Retreats in January

On Tuesday, the National Federation of Independent Business (NFIB) released its Small Business Optimism Index (SBOI) for January. The SBOI declined 2.3 points to a reading of 102.8 in January. Even with the decline, this marks the third consecutive month above the 51-year average of 98.

Other highlights of the report include the following:

• The net percentage of owners expecting the economy to improve dropped five points from December to a seasonally adjusted net 47%.
• 18% of owners cited inflation as their most significant business challenge, down two points from December. This matches labor quality as the top concern. Inflation last ranked this low in November 2021.
• The net percentage of owners raising average selling prices declined two points to a seasonally adjusted net 22%.
• A seasonally adjusted net 26% of owners plan to increase prices in January, down two points from December.
• 35% of owners (seasonally adjusted) reported unfilled job openings they could not fill in the current period, unchanged from December.
• 20% (seasonally adjusted) plan capital outlays in the next six months, a seven-point drop from December.
• A net 3% of owners said their last loan was harder to obtain than in previous attempts, down one point and the lowest level since June 2022.
• A net 0% (seasonally adjusted) of owners plan inventory investment in the coming months, down six points from December (the highest reading since December 2021).

In remarks accompanying the report, NFIB Chief Economist Bill Dunkelberg said:

“Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise. Hiring challenges continue to frustrate Main Street owners as they struggle to find qualified workers to fill their many open positions. Meanwhile, fewer plan capital investments as they prepare for the months ahead.”