Small business optimism falls further in January

The NFIB Small Business Optimism Index declined in January to 95.0, down 0.9 from December and three points below the 47-year average of 98.

The percentage of business owners expecting better conditions over the next six months dropped seven points from December to a net negative 23%, the lowest level since November 2013, the index shows. Over the past four months, the net percentage of owners expecting better business conditions has fallen 55 points.

It was among four of the 10 Index components to decline over the month. Others include small business owners expecting higher real sales (which dropped 2 percentage points to a net negative 6%), current inventory (which decreased 2 percentage points to a net positive 5%) and earnings trends (down 2 percentage points to a net negative 16%). 

Meanwhile, current job openings and expected credit conditions improved by 1 percentage point and 2 percentage points, respectively. The other four components remained unchanged.

Though state-specific data isn’t available, NFIB State Director Dawn Starns McVea says Louisiana’s small business owners will be “reluctant to invest in new equipment or locations or add positions until they’re confident the worst of the pandemic is behind us and things are really back on track.”

In a prepared statement, NFIB Chief Economist Bill Dunkelberg says that as Congress debates another stimulus package, small employers “welcome any additional relief that will provide a powerful fiscal boost as their expectations for the future are uncertain.”

At the same time, NFIB’s monthly jobs report showed job growth continued in January. Firms increased employment by 0.36 workers per firm on average over the past few months, up from 0.30 in December, signifying a strong two-month performance. However, hiring remains uneven geographically and by industry.

Check out NFIB’s Small Business Optimism Index and its Monthly Jobs Report.