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. Nonetheless, the index stays 4.4 factors under its current 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 Principal Avenue, and for a lot of causes,” stated NFIB Chief Economist Invoice Dunkelberg. “These small enterprise homeowners anticipating higher enterprise circumstances within the subsequent six months dropped and the p.c viewing the present interval as a superb time to increase fell, however stays nicely above the place it was within the fall. Inflation stays a significant drawback, ranked second behind the highest drawback, labor high quality.”
Key Findings from the Survey
- The web share of householders anticipating the financial system to enhance dropped by 10 factors to a web adverse 37% (seasonally adjusted).
- The proportion of householders viewing the present interval as a superb time to increase fell 5 factors to 12%, marking the biggest month-to-month lower since April 2020.
- Sixteen p.c of householders recognized inflation as their most vital drawback, a two-point lower from January, inserting it slightly below labor high quality as the first concern.
- A web 32% of householders reported elevating common promoting costs, a 10-point enhance from January and the third highest in survey historical past.
- A seasonally adjusted web 29% of householders plan value hikes over the subsequent three months, up three factors from January and the best stage in 11 months.
- Stories of labor prices as the only most essential drawback rose three factors to 12%, nearing the best recorded stage 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 best studying since August 2024. Among the many 53% of householders hiring or attempting 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 challenge.
Seasonally adjusted, a web 33% of householders reported elevating compensation, unchanged from January, whereas a web 18% plan to lift 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 tools.
- 30% bought autos.
- 13% expanded or improved services.
- 12% spent on new fixtures and furnishings.
- 5% acquired new buildings or land for growth.
The proportion of householders planning capital outlays within the subsequent six months declined by one level to 19%.
Gross sales developments confirmed some weakening, with a web adverse 12% of householders reporting larger nominal gross sales over the previous three months, down two factors from January. The web share of householders anticipating larger 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 adverse 6% of householders reporting stock positive factors, unchanged from January. The proportion of householders planning stock funding declined by one level to a web adverse 1%.
Financing circumstances confirmed minimal change. A web 2% of small enterprise homeowners reported that their final mortgage was tougher to acquire than earlier makes an attempt, down one level from January and the bottom studying since February 2022. Three p.c of householders 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. Based on the survey:
- 11% rated their enterprise well being as glorious.
- 55% reported it nearly as good.
- 27% described it as okay.
- 6% categorised their enterprise well being as unhealthy.
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 primarily based on responses from a random pattern of NFIB members and was launched on March 11, 2025.
