MADISON, WI (Feb. 11, 2025) – The NFIB Small Business Optimism Index fell by 2.3 points in January to 102.8. This is the third consecutive month above the 51-year average of 98. The Uncertainty Index rose 14 points to 100 – the third highest recorded reading – after two months of decline.
“Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise,” said, NFIB Chief Economist Bill Dunkelberg. “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.”
“Wisconsin manufacturing and agriculture continues to face significant hiring challenges. 90% of small businesses trying to hire report few or no qualified applicants, highlighting the critical need for workforce development in our state,” said NFIB Wisconsin State Director Bill G. Smith. “NFIB encourages lawmakers to prioritize policies that help Main Street address these challenges and grow our workforce.”
Key findings include:
- The net percent of owners expecting the economy to improve fell five points from December to a net 47% (seasonally adjusted).
- Eighteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from December and matching labor quality as the top issue. The last time it was this low was in November 2021.
- The net percent of owners raising average selling prices fell two points from December to a net 22% (seasonally adjusted).
- Seasonally adjusted, a net 26% plan price hikes in January, down two points from December.
- Thirty-five percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, unchanged from December.
- Twenty percent (seasonally adjusted) plan capital outlays in the next six months, down seven points from December.
- A net 3% of owners reported that their last loan was harder to get than in previous attempts (down one point). The last time it was this low was June 2022.
- A net 0% (seasonally adjusted) of owners plan inventory investment in the coming months, down six points from December’s highest reading since December 2021.
As reported in NFIB’s monthly jobs report, a seasonally adjusted 35% of all small business owners reported job openings they could not fill in January, unchanged from December. Of the 52% of owners hiring or trying to hire in January, 90% reported few or no qualified applicants for the positions they were trying to fill. The percent of small business owners reporting labor quality as the single most important problem for business fell one point from December to 18%. Labor costs reported as the single most important problem for business owners fell two points to 9%, four points below the highest reading of 13% reached in December 2021. Seasonally adjusted, a net 33% reported raising compensation, up four points from December’s lowest reading since March 2021. A seasonally adjusted net 20% plan to raise compensation in the next three months, down four points from December. Fifty-eight percent of owners reported capital outlays in the last six months, up two points from December. Of those making expenditures, 41% reported spending on new equipment, 24% acquired vehicles, and 16% improved or expanded facilities. Twelve percent spent money on new fixtures and furniture and 5% acquired new buildings or land for expansion. Twenty percent (seasonally adjusted) plan capital outlays in the next six months, down seven points from December. This index component had the greatest impact on this month’s Index decline. A net negative 14% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down one point from December. The net percent of owners expecting higher real sales volumes fell two points from December’s highest reading since January 2020 to a net 20% (seasonally adjusted). The net percent of owners reporting inventory gains fell six points to a net negative 6%, seasonally adjusted. Not seasonally adjusted, 9% reported increases in stocks and 21% reported reductions. A net negative 1% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in January, unchanged from December. A net 0% (seasonally adjusted) of owners plan inventory investment in the coming months, down six points from December’s highest reading since December 2021. The net percent of owners raising average selling prices fell two points from December to a net 22% seasonally adjusted. Eighteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from December and matching labor quality as the top issue. The last time it was this low was November 2021. Unadjusted, 9% of owners reported lower average selling prices and 30% reported higher average prices. Price hikes were the most frequent in the finance (47% higher, 6% lower), retail (35% higher, 6% lower), wholesale (34% higher, 4% lower), and professional services (30% higher, 3% lower) sectors. Seasonally adjusted, a net 26% plan price hikes in January. The frequency of reports of positive profit trends was a net negative 25% (seasonally adjusted), one point less negative than in December. Among owners reporting lower profits, 34% blamed weaker sales, 17% cited usual seasonal change, 10% blamed the rise in the cost of materials, and 9% cited labor costs. For owners reporting higher profits, 49% credited sales volumes, 24% cited usual seasonal change, and 11% cited higher selling prices. Three percent of owners reported that all their borrowing needs were not satisfied, up one point from December. Twenty-five percent reported all credit needs met and 62% said they were not interested in a loan. A net 3% reported their last loan was harder to get than in previous attempts. The last time this reading was this low was in June 2022. Three percent of owners reported that financing was their top business problem in January, down one point from December. A net 3% reported paying a higher rate on their most recent loan, up two points from December’s lowest reading since September 2021. The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in January 2025.
