Data released by the National Federation of Independent Business (NFIB) showed that small business sentiment deteriorated again in February, reaching its lowest level since May 2023.
The optimism index decreased by 0.5 points to 89.4 points. Economists had expected an increase to 90.5 points. This is the 26th consecutive month below the 50-year average of 98 points. The last time the Index was at or above the average was December 2021. Of the 10 index components, 2 increased, 7 decreased, and 1 was unchanged. Meanwhile, the outlook for near-term business conditions is at 50-year low levels. In February, 39% expected “worse” conditions in six months, only 7% expected “better.” And these numbers are better than in June 2022 when 68% expected worse business conditions and only 5% expected better (record low).
The NFIB said that 23% of owners reported that inflation was their single most important problem in operating their business, up 3% from last month. Price hikes were most frequent in the finance (59% higher, 2% lower), retail (43% higher, 13% lower), construction (42% higher, 8% lower), services (36% higher, 8% lower), and professional services (36% higher, 0% lower) sectors. Seasonally adjusted, a net 30% plan price hikes (down 3%). Meanwhile, those surveyed who reported labor difficulties as a top concern fell to 16% from 21% in January, the lowest reading since April 2020. Labor cost reported as the single most important problem for business owners increased 1% to 11%.