NEW YORK – Small business owners experienced increased uncertainty regarding their future prospects this January as they continued to grapple with persistent labor issues and ongoing inflationary pressures. A national survey conducted by the National Federation of Independent Business (NFIB) revealed that the uncertainty index jumped 14 points to reach 100, marking the third highest reading ever recorded after a two-month period of decline. The NFIB highlighted that many business owners feel hesitant about investing in their enterprises due to unclear business conditions anticipated in the coming months.
This sentiment reflects a broader trend in overall consumer confidence, which took a steep decline in February, registering the largest monthly decrease in over four years. Contributing factors include the perception of unyielding inflation and a potential trade war under President Donald Trump, which many Americans now view as unavoidable.
In the survey conducted by NFIB, overall business optimism dropped by 2.3 points, settling at 102.8 in January, though it remains relatively high. Despite a surge in optimism following the presidential election, the index has consistently stayed above the 51-year average of 98 for three consecutive months.
Bill Dunkelberg, Chief Economist for the NFIB, commented, “Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise. Hiring challenges continue to frustrate Main Street owners as they struggle to find qualified workers to fill their many open positions. Meanwhile, fewer plan capital investments as they prepare for the months ahead.”
Inflation remains a significant concern, with 18% of business owners citing it as their primary operational challenge, a slight decrease of two points from December, tying with labor quality as their top issue.
Labor shortage continues to be a major obstacle. A seasonally adjusted 35% of all small business owners reported job vacancies they were unable to fill in January, consistent with December’s figure. Among the 52% of owners actively hiring or attempting to hire in January, 90% encountered a scarcity of qualified applicants.
Moreover, fewer small businesses intend to make capital investments to expand. The percentage of businesses planning capital expenditures in the next six months has dropped to 20%, marking a decline of seven percentage points compared to December.
