The National
Federation of Independent Business (NFIB) announced on Tuesday its Small
Business Optimism Index fell by 0.5 point to 89.4 in February, following a 2.0-point decline in the previous month. This represented the lowest reading since May 2023 (89.4)
and marked the 26th straight month the indicator stayed below the 50-year
average of 98.0.
Economists had foreseen
the index to rise to 90.7 in February.
According to
the report, the February drop in the headline gauge was due to decreases in 7
components, driven by a measure of small business owners planning to increase inventories
in the coming months (-4 points) and a measure of small business owners judging that
now is a good time to expand (-3
points). These declines, however, were partly offset by gains in such 2
indicators, as a measure of small business owners expecting higher real sales
volumes (+6 points) and a measure of owners expecting easier credit conditions
(+2 points). Meanwhile, the measure of small business owners viewing current
inventory stocks as “too low” was unchanged.
Commenting on
the latest data, Bill Dunkelberg, NFIB Chief Economist, noted that, while
inflation pressures had eased since peaking in 2021, small business owners were
still managing the elevated costs of higher prices and interest rates. “The
labor market has also eased slightly as small business owners are having an
easier time attracting and retaining employees,” he added.