NFIB Small Business Optimism Index Trends Lower to Start 2024

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its NFIB Small Business Optimism Index (SBOI) for January. The SBOI declined 2.0 points to a reading of 89.9 in January, marking the 25th consecutive month that the Index has been below the 49-year average reading of 98. The last time the Index was at or above the average was December 2021.

In January, the net percentage of small business owners who expected real sales to be higher declined 12 points from December to a net negative 16%, seasonally adjusted. The NFIB noted that this is particularly negative shift in expectations.

Other highlights of the SBOI include the following:

• Small business owners reporting positive profit trends was a net negative 30%, five points worse than December.
• Twenty percent of small business owners reported that inflation was their single most important problem in operating their business, down three points from December and one point behind labor quality.
• The number of small business owners planning to fill open positions softened, with a seasonally adjusted net 14% planning on creating new jobs in the next three months, down two points from December and the lowest level since May 2020.
• Seasonally adjusted, 39% of all small business owners reported job openings that they could not fill in the current period, down one point from December and the lowest reading since January 2021.

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

“Small business owners continue to make appropriate business adjustments in response to the ongoing economic challenges they’re facing. In January, optimism among small business owners dropped as inflation remains a key obstacle on Main Street.”