The NFIB Small Business Optimism Index fell 0.5 points in February to 98.8, marking the second consecutive monthly decline. The index slipped from 99.3 in January and came in below the consensus forecast of 99.7, though it still sits slightly above the survey’s 52-year average of 98.
The drop signals growing caution among the roughly 620 NFIB member businesses surveyed each month. Despite the headline decline, the NFIB report noted some bright spots. Owners reported higher sales and increased profits in February, and the Uncertainty Index actually fell 3 points from January to 88, suggesting business owners feel somewhat more settled about the near-term outlook.
NFIB Chief Economist Bill Dunkelberg said that while optimism dipped, small businesses reported “feeling more certain in February as they look toward the coming months.” He pointed to competition from large businesses as a stress point for Main Street firms.
On the jobs front, hiring plans cooled noticeably. A net 12% of owners said they plan to create new jobs in the next three months, down 4 points from January and the lowest since May 2025. Labor quality as the top business problem fell for a fourth straight month, with just 15% of owners citing it, the lowest since April 2020. A net 34% of owners reported raising worker compensation, the highest level since March 2025.
For context, the index had been on a steady climb after the November 2024 election, peaking at 105.1 in December 2024 before gradually sliding back over the past several months. The February reading of 98.8 puts the index near levels seen in mid-2025, before optimism picked up in the fall.
Small business owners planning sales forecasts and staffing decisions should pay attention to the trend. Two straight months of declining optimism, combined with weakening hiring plans, suggest the broader business environment is cooling somewhat. Owners who have been planning price increases, though, may take comfort in the fact that 32% of firms still plan to raise prices in the coming months.
The next NFIB Optimism Index release, covering March 2026 data, is expected on the second Tuesday of April. That report will be closely watched for signs of whether the current softening is stabilizing or deepening. The full February report is available on NFIB’s website.
