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Prairie State Wire

Saturday, March 15, 2025

Small business optimism falls amid rising uncertainty and workforce challenges

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Sandy Starr Administrative Assistant | Official Website

Sandy Starr Administrative Assistant | Official Website

The NFIB Small Business Optimism Index decreased by 2.1 points in February, settling at 100.7. This marks the fourth consecutive month that the index remains above the 51-year average of 98, though it is still 4.4 points below its recent peak of 105.1 in December. The Uncertainty Index increased by four points to reach 104, which is the second-highest recorded level.

"Uncertainty is high and rising on Main Street and for many reasons," stated NFIB Chief Economist Bill Dunkelberg. He noted a decline in small business owners expecting better business conditions over the next six months and a drop in those viewing the current period as a good time to expand, although this remains higher than levels seen last fall. Inflation continues to be a significant issue, ranked second only to labor quality concerns.

NFIB Illinois State Director Noah Finley highlighted ongoing workforce challenges: "Workforce challenges continue to be a critical issue with 38% of Illinois small business owners reporting unfilled job openings—the highest since August 2024." He emphasized that lawmakers should focus more on workforce development rather than imposing burdensome mandates.

Key findings from the report include:

- A ten-point drop in the net percentage of owners expecting economic improvement from January, reaching a net 37% (seasonally adjusted).

- A decrease in those seeing it as a good time to expand their business, down five points from January.

- Sixteen percent cited inflation as their primary operational problem, slightly lower than labor quality issues.

- An increase in owners raising average selling prices by ten points from January.

- Labor costs reported as the top problem rose three points to 12%.

A new survey question revealed that 11% of owners rated their business health as excellent, while most considered it good or okay.

According to NFIB's monthly jobs report, job openings that could not be filled reached a seasonally adjusted high of 38%, up three points from January and marking the highest level since August 2024. Of those hiring or attempting to hire, 89% reported few or no qualified applicants.

Plans for new job creation have decreased slightly with a seasonally adjusted net of 15% planning new hires over the next three months.

Labor quality emerged as the top concern for small businesses, surpassing inflation issues.

The report also indicated stable capital outlays compared to January and noted various expenditures such as equipment purchases and facility improvements among others.

Sales trends showed some declines with a net negative expectation for real sales volumes dropping six points from January after previously surging post-election.

The NFIB Research Center has been collecting Small Business Economic Trends data since the fourth quarter of 1973 through quarterly surveys and monthly surveys starting in 1986. Survey participants are randomly selected from NFIB’s membership base. The latest survey was conducted in February 2025 and released on March's second Tuesday.

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