The Nationwide Federation of Impartial Enterprise (NFIB) reported a decline in small enterprise optimism for February, with its Small Enterprise Optimism Index falling by 2.1 factors to 100.7. Regardless of the decline, this marks the fourth consecutive month the index has remained above the 51-year common of 98. Nevertheless, the index stays 4.4 factors under its latest peak of 105.1 recorded in December. In the meantime, the Uncertainty Index rose by 4 factors to 104, marking the second-highest studying ever recorded.
“Uncertainty is excessive and rising on Most important Avenue, and for a lot of causes,” mentioned NFIB Chief Economist Invoice Dunkelberg. “These small enterprise homeowners anticipating higher enterprise circumstances within the subsequent six months dropped and the % viewing the present interval as a great time to increase fell, however stays properly above the place it was within the fall. Inflation stays a serious drawback, ranked second behind the highest drawback, labor high quality.”
Key Findings from the Survey
- The web share of homeowners anticipating the economic system to enhance dropped by 10 factors to a web destructive 37% (seasonally adjusted).
- The proportion of homeowners viewing the present interval as a great time to increase fell 5 factors to 12%, marking the biggest month-to-month lower since April 2020.
- Sixteen % of homeowners recognized inflation as their most vital drawback, a two-point lower from January, inserting it just under labor high quality as the first concern.
- A web 32% of homeowners reported elevating common promoting costs, a 10-point improve from January and the third highest in survey historical past.
- A seasonally adjusted web 29% of homeowners plan value hikes over the subsequent three months, up three factors from January and the very best degree in 11 months.
- Experiences of labor prices as the only most necessary drawback rose three factors to 12%, nearing the very best recorded degree of 13% from December 2021.
Hiring Challenges and Wage Developments
The survey revealed continued hiring difficulties amongst small companies. A seasonally adjusted 38% of small enterprise homeowners reported job openings they might not fill in February, up three factors from January and the very best studying since August 2024. Among the many 53% of homeowners hiring or making an attempt to rent in February, 89% reported few or no certified candidates.
A web 15% of small enterprise homeowners plan to create new jobs within the subsequent three months, a three-point lower from January. Labor high quality stays the highest problem for enterprise homeowners, rising one level to 19%, overtaking inflation because the main concern.
Seasonally adjusted, a web 33% of homeowners reported elevating compensation, unchanged from January, whereas a web 18% plan to boost compensation within the subsequent three months, down two factors from January.
Capital Expenditures and Gross sales Efficiency
Capital spending amongst small enterprise homeowners remained regular, with 58% reporting capital outlays within the final six months, unchanged from January. Amongst these making expenditures:
- 37% invested in new gear.
- 30% bought autos.
- 13% expanded or improved amenities.
- 12% spent on new fixtures and furnishings.
- 5% acquired new buildings or land for growth.
The proportion of homeowners planning capital outlays within the subsequent six months declined by one level to 19%.
Gross sales traits confirmed some weakening, with a web destructive 12% of homeowners reporting increased nominal gross sales over the previous three months, down two factors from January. The web share of homeowners anticipating increased actual gross sales volumes declined by six factors to 14%, marking the second consecutive month-to-month drop.
Stock and Financing Circumstances
Stock ranges remained steady, with a web destructive 6% of homeowners reporting stock features, unchanged from January. The proportion of homeowners planning stock funding declined by one level to a web destructive 1%.
Financing circumstances confirmed minimal change. A web 2% of small enterprise homeowners reported that their final mortgage was more durable to acquire than earlier makes an attempt, down one level from January and the bottom studying since February 2022. Three % of homeowners cited financing and rates of interest as their prime enterprise drawback, unchanged from January, whereas a web 4% reported paying the next price on their most up-to-date mortgage.
New Enterprise Well being Evaluation
For the primary time, NFIB launched a brand new query assessing how small enterprise homeowners view the general well being of their enterprise. In line with the survey:
- 11% rated their enterprise well being as glorious.
- 55% reported it nearly as good.
- 27% described it as okay.
- 6% categorized their enterprise well being as dangerous.
The NFIB Small Enterprise Financial Developments report has been carried out quarterly since 1973 and month-to-month since 1986. The February 2025 survey was based mostly on responses from a random pattern of NFIB members and was launched on March 11, 2025.
