Small business owners were less optimistic last month but still positive, according to the National Federation of Independent Business. .The small business optimism index fell a half-point to 98.8, its second straight monthly drop but still higher than the 52-year average of 98.0. The index measuring uncertainty fell three points to 88 as fewer owners were uncertain over whether to make capital expenditures. The earnings trends index increased seven points. “This larger gain was counterbalanced by a decline in sales expectations, which fell just below its December level after a substantial January gain,” according to NFIB. The employment index increased nearly a point from January to 103.5, which is 2.3 points higher than its 2025 average of 101.2 and 3 1/2 points higher than its historical average. One-third of owners had job openings they could not fill in the current period, up two points from January. Twenty-eight percent had openings for skilled workers, while 10 percent had openings for unskilled labor, which was unchanged from January. A seasonally adjusted net 12 percent of owners expect to create jobs in the next three months, down four points from January and its lowest reading in nearly a year. Fifty-four percent were either hiring or trying to hire last month, up four points from January. Eighty-five percent had few or no qualified applicants for the positions they were attempting to fill, up two points. Fifteen percent of small business owners cited labor quality issues as their top concern last month, a nearly six-year low and down one point from January. Nine percent of owners cited labor costs as their most pressing issue. A net 34 percent raised compensation, up two points from January and a 12-month high. A net 22 percent expect to raise compensation in the next three months, unchanged from the previous month. “These higher numbers are indicative of general tightness in the labor market, though the market remains in balance overall,” said NFIB Chief Economist William Dunkelberg. Positive profit trend reports increased 7 points to a net negative 14 percent, its best mark in more than four years. Those reporting higher profits cited sales volume, higher selling prices and seasonal changes. Those seeing lower profits cited a drop in sales, typical seasonal changes and rising material costs. Other report findings included:Nearly 60 percent of small business owners said supply chain disruptions impacted their business, down three points from January. Nearly 40 percent reported no impact, up two points. Fifty-four percent made capital outlays in the last six months, down six points from January. Of those, 37 percent spent on new equipment, 28 percent acquired vehicles and 15 percent improved or expanded facilities. An unchanged 18 percent of small business owners expect to make capital outlays in the next six months, unchanged from January. Owners raising average selling prices dropped two points to a net 24 percent, its third straight month of slowed increases and above the historical average. Thirty-five percent had higher average selling prices, down one point from January, while 11 percent reported lower average selling prices. Twelve percent of owners said inflation was their most pressing business problem, unchanged from January. The share of owners expecting business conditions to strengthen fell three points to a net 18 percent, which is still well higher than its average of a net 4 percent.
