The National Federation of Independent Business (NFIB) reported a slight decrease in its Small Business Optimism Index for January, dropping 0.2 points to 99.3 but remaining above the historical average of 98. Of the ten components measured, three saw increases while seven declined. The largest change was seen in expected real sales volume, which rose by six points. The Uncertainty Index also increased by seven points from December, reaching 91, mainly due to more owners expressing uncertainty about expanding their businesses.
NFIB Chief Economist Bill Dunkelberg commented on the findings: “While GDP is rising, small businesses are still waiting for noticeable economic growth. Despite this, more owners are reporting better business health and anticipating higher sales.”
Logan Shine, NFIB Iowa State Director, addressed challenges faced by certain sectors: “Agriculture and manufacturing rely on stability, and right now, uncertainty is the biggest hurdle. With 18% of owners nationwide citing taxes as their top problem, we are looking for federal results that prioritize tax relief and reduced government spending to help us manage rising overhead costs.”
A notable addition in this month’s report is the new NFIB Small Business Employment Index. This index combines several jobs-related questions into one metric and currently stands at 101.6—about 1.5 points above its long-term average—indicating a balanced labor market.
Key data from January include:
– Thirteen percent of owners cited insurance cost or availability as their most significant problem, marking an increase not seen since December 2018.
– Sixty percent reported making capital outlays over the past six months—the highest level since November 2023.
– A net negative six percent reported paying higher interest rates on recent loans compared to prior attempts.
– Sixteen percent named labor quality as their chief concern—a figure that has dropped for three consecutive months.
– Expectations for higher real sales volumes over the next quarter rose to a net sixteen percent.
– Inventory gains reached levels last observed in January 2023.
– Supply chain disruptions continued to affect sixty-two percent of respondents; however, those reporting moderate impact decreased slightly from December.
– Twenty-six percent raised selling prices—a figure above historical averages—and thirty-two percent plan further price hikes within three months.
Business health assessments showed improvement: fourteen percent rated conditions as excellent (up five points), fifty-four percent said good (unchanged), twenty-seven percent fair (down seven points), and four percent poor (up one point).
In terms of employment trends, thirty-one percent had job openings they could not fill—still well above the historical average—even though this measure fell two points from December. Among those hiring or attempting to hire during January, eighty-eight percent encountered few or no qualified applicants.
Capital expenditures were up compared to previous months; forty-four percent spent on equipment while other categories such as vehicles and facility improvements saw minor fluctuations.
Other persistent concerns included inflation (twelve percent) and government regulations (nine percent). Labor costs remained stable at nine percent identifying it as their primary challenge.
The survey forming the basis of these findings was conducted among randomly selected NFIB members during January 2026 and continues a long-standing series dating back to quarterly surveys begun in 1973 and monthly tracking since 1986.
The latest episode of NFIB Research Center’s “Small Business by the Numbers” podcast accompanies this report.
