Prairie State Wire

The NFIB Small Business Optimism Index saw a decline of 2.3 points in January, reaching 102.8, marking the third consecutive month above the long-term average of 98 over 51 years. The Uncertainty Index increased by 14 points to 100, which is among the highest recorded readings following two months of decrease.

"Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise," stated NFIB Chief Economist Bill Dunkelberg. He highlighted ongoing hiring challenges as businesses face difficulties finding qualified workers for open positions and noted that fewer businesses are planning capital investments as they brace for upcoming months.

NFIB Illinois State Director Noah Finley expressed concerns about potential policy changes affecting small businesses: "Small business owners remain on edge about the upcoming expiration of the federal Small Business Tax Deduction and the lingering inflation and workforce pressures." He urged state policymakers to reject legislation like SB 2413, which he believes would impose costly programs and increase taxes on both workers and employers.

Key findings from the report show a drop in optimism about economic improvement, with a net 47% expecting better conditions—a decrease of five points from December. Inflation remains a significant concern for 18% of owners, matching labor quality as their top issue. There was also a slight reduction in owners raising average selling prices and planning price hikes.

Employment challenges persist with 35% reporting unfilled job openings in January. Of those trying to hire, a vast majority reported difficulty finding qualified applicants. Despite this, compensation adjustments were reported by some businesses with plans for further increases.

Investment intentions have waned; only 20% plan capital outlays in the next six months—a seven-point decline from December—affecting this month's index significantly. Inventory levels showed minimal planned investment while sales expectations slightly decreased.

Credit access remained stable with minor fluctuations in borrowing needs satisfaction and loan difficulty perceptions compared to previous attempts.

The NFIB Research Center has been collecting data on small business trends since 1973 through quarterly surveys initially and monthly surveys since 1986. The latest survey reflects responses gathered in January 2025.