The National Federation of Independent Business (NFIB) has reported a decrease in small business optimism in February, and its optimism rate for small companies dropped by 2.1 points to 100.7. Despite the autumn, this implies the fourth month in a row, the indicator remained above the 51-year average 98. However, the index stays 4.4 points below its last top 105.1 registered in December. Meanwhile, the uncertainty rate increased by 4 points to 104, which suggests the second highest reading that has ever been registered.
“Uncertainty is high and grows on Main Street and many reasons,” said NFIB chief economist Bill Dunkelberg. “The owners of small companies expecting better business conditions in the next six months have dropped, and the percentage of perception of the current period as a good time to expand has dropped, but remains much above the autumn. Inflation remains a serious problem, taking second place in the most important problem and quality of work. “
Key arrangements from the survey
- The net percentage of owners expecting that the economy will improve, dropped by 10 points to a negative 37% net (seasonally corrected).
- The percentage of owners perceiving the present period as a great time to expand dropped by five points as much as 12%, which suggests the most important monthly decline from April 2020.
- Sixteen percent of the owners identified inflation as its most significant problem, a two -point decrease from January, which puts it barely below the standard of work because the essential problem.
- 32% of net owners reported raising average sales prices, a 10-point increase from January and the third highest study in history.
- Seasonally corrected 29% net of owners plans price increases over the following three months, three points from January and the best level in 11 months.
- Reports about the price of work as crucial problem increased by three points to 12%, approaching the best registered level 13% from December 2021.
Employing challenges and payroll trends
The study revealed further difficulties in employment amongst small companies. Seasonally corrected 38% of small business owners submitted job offers that they might not complete in February, three points from January and the best reading from August 2024. Among 53% of owners employing or attempting to employ in February, 89% reported few qualified applicants.
15% net of small business owners plans to create latest jobs in the following three months, which is a 3 -point decline from January. The quality of work stays the largest challenge for business owners, raising one point to 19%, ahead of inflation as a number one issue.
Seasonally corrected, 33% of the online owners reported raising compensation, unchanged from January, while 18% net plans to extend compensation over the following three months, which is two points since January.
Capital expenses and sales results
Capital expenses amongst small business owners have remained stable, and 58% of capital reporting over the past six months, unchanged since January. Among the people made:
- 37% invested in latest equipment.
- 30% of purchased vehicles.
- 13% of prolonged or improved facilities.
- 12% spent on latest devices and furniture.
- 5% acquired latest buildings or land for expansion.
The percentage of capital expenditure of owners’ planning over the following six months dropped by one point to 19%.
Sales trends have shown some weakness, with a negative 12% of owners reporting higher nominal sales over the past three months, which is two points since January. The net percentage of owners expecting higher real sales fell by six points to 14%, which suggests a second monthly decline.
Wrestling and financing conditions
Stock levels remained stable and net negative 6% of owners reporting inventory profits, unchanged from January. The percentage of investment inventory of owners’ planning has fallen by one negative point of 1%.
Financing conditions showed a minimum change. 2% of the online owners of small companies reported that their last loan was harder to acquire than previous attempts, at one point from January and the bottom reading since February 2022. Three percent of the owners gave financing and rates of interest as the best business problem, unchanged since January, while 4% net reported the next rate for the last loan.
New business health assessment
For the primary time, NFIB introduced a brand new query to evaluate how the owners of small businesses perceive the general health of their activities. According to the survey:
- 11% assessed their business health as perfect.
- 55% reported it nearly as good.
- 27% described it as fantastic.
- 6% classified their business health as bad.
The NFIB Small Business Economic Trends report has been carried out quarterly since 1973 and a month from 1986. The study of February 2025 was based on the response of the random sample of NFIB members and was issued on March 11, 2025.
