The National Federation of Independent Business Small Business Optimism Index edged down 0.2 points in January to 99.3, falling short of market expectations of 99.8 but above its 30-year average of 97.5. Uncertainty increased sharply, with the NFIB Uncertainty Index jumping 7 points to 91, driven largely by more owners reporting it is not a good time to expand and well above its 30-year average of around 72. Labor pressures continued to ease, with fewer firms citing labor quality as their top problem and hiring intentions cooling slightly.
The ABA Office of the Chief Economist believes that the January report points to a mixed near-term outlook for small-business credit demand. Improving sales expectations and solid recent capital spending support ongoing commercial activity, but elevated uncertainty and weak forward-looking investment plans suggest firms remain cautious about taking on new commitments. Credit conditions appear to be easing at the margin, with fewer borrowers reporting higher interest rates on recent loans, yet the share of firms borrowing regularly remains low.
