The National
Federation of Independent Business (NFIB) informed on Tuesday its Small
Business Optimism Index declined by 2.0 points to 89.9 in January 2024,
following a 1.3-point jump in the previous month. This was the lowest reading since
May 2023 (89.4) and marked the 25th straight month the indicator stayed below
the 50-year average of 98.0.
Economists had predicted
the index to drop to 91.1 in the first month of 2024.
According to
the report, the January fall in the headline gauge was due to declines in 6
components, driven by a measure of small business owners expecting higher real
sales volumes (-12 points) and a measure of small business owners reporting positive profit trends (-5 points). These decreases,
however, were partly offset by gains in such 2 indicators, as a measure of planning
to increase inventories (+2. points) and a measure of owners viewing current inventory
stocks as “too low” (+1 point). In addition, two components were unchanged.
Commenting on
the latest data, Bill Dunkelberg, NFIB Chief Economist, noted that the owners
of small businesses continue to make appropriate business adjustments in response
to the ongoing economic challenges they’re facing. “In January, optimism among
small business owners dropped as inflation remains a key obstacle on Main
Street,” he added.