Input Stories

The NFIB Small Business Optimism Index fell 2.3 points in January to 102.8. Despite optimism falling, it was the third consecutive month above the 51-year average of 98. Of the 10 components included in the index, one increased, seven decreased and two stayed the same. After declining the past two months, the Uncertainty Index jumped 14 points to 100, the third highest reading of the index.

Inflation and labor quality were cited as the top concerns for many small business owners in January, with 18% reporting them as their most important problems. Although inflation remains a top concern, the last time the index was this low was November 2021, suggesting higher input and labor costs concerns eased in January. In January, 35% of small business owners reported jobs they could not fill, unchanged from December. Reports of too few unskilled applicants declined, but shortages of skilled applicants remain, particularly in manufacturing, transportation and construction.

A net 33% of small business owners reported raising compensation, up 4% from December. Profitability remained under pressure, with a net negative 25% reporting positive profit trends, one point less negative than December. Of those reporting lower profits, 34% claimed weaker sales, while 17% cited ordinary seasonal adjustments. A net 26% of small business owners planned price hikes in January, down two points from December. Just 3% reported their last loan was harder to get than previous attempts, and a net 3% of owners reported paying a higher rate on their most recent loan.

The outlook for general business conditions stalled slightly, slipping five points to 47. Small business owners, while still broadly optimistic, are still responding to the uncertainty of the Trump 2.0 transition. In particular, the continuation of the 2017 tax cuts and deregulation will be the key policy areas of concern for the small business community in 2025.