The NFIB Small Business Optimism Index fell more than expected, down -2.3 pts to 102.8, below expectations of a smaller decline to 104.6.

• The small business business conditions outlook index remained strong despite pulling back slightly, down -5 pts to 47.
• Despite an optimistic outlook, measures of sales and earnings were unchanged in contractionary territory at -25 and -14 respectively.

The NFIB price indexes were also unchanged, remaining in the tight range they have been for the last two years.

• The Actual Price Changes index was unchanged at 24.
• The Price Plans index was unchanged at 28.
• While the indexes were static, 18% of owners reported that inflation was their single most important problem, down -2 ppts from December. The last time it was this low was in November 2021.

The employment indexes were mixed with a noticeable pick up in current employment was a slight tick down in hiring plans.

• The Current Employment index improved 4 pts to 1, the first positive reading since March 2023.
• The Hiring Plans index edged down -1 pt but is still above move 2024 readings.
• 35% of small business owners reported job openings they could not fill.

As rates rallied in December and January, small businesses reported a significant increase in borrowing costs. The actual interest rate paid on short-term loans was up from 8.7% in December to 9.4% in January. This is the highest interest rate small businesses have had to pay in January in over 20 years.