Minnesota State Wire

The NFIB Small Business Optimism Index experienced a decline of 2.1 points in February, settling at 100.7. Despite this decrease, the index remains above the long-term average of 98 for the fourth consecutive month, although it is notably lower than its recent peak of 105.1 in December.

NFIB Chief Economist Bill Dunkelberg commented on the situation, stating, "Uncertainty is high and rising on Main Street and for many reasons." He noted a drop in small business owners' expectations for better business conditions over the next six months and a decline in those viewing the current period as favorable for expansion. Dunkelberg highlighted inflation and labor quality as significant issues affecting businesses.

Jon Boesche, NFIB Minnesota State Director, emphasized workforce challenges specific to Minnesota: “We’re seeing a critical workforce challenge in Minnesota with 48% of businesses reporting few or no qualified applicants for open positions.” He urged state lawmakers to implement policies that support small businesses.

The report reveals several key findings:

- The net percentage of owners expecting economic improvement fell by ten points to a net 37%.

- Only twelve percent believe it is a good time to expand their business.

- Sixteen percent consider inflation their most pressing issue, just below labor quality concerns.

- There was a notable rise in owners raising average selling prices, with a net increase of 32%.

In terms of employment, 38% reported unfilled job openings in February—the highest since August 2024—while 53% were actively hiring or attempting to hire. Of these employers, 89% reported difficulty finding qualified candidates.

A seasonally adjusted net 15% plan to create new jobs within three months. However, labor quality has surpassed inflation as the top concern among small business owners.

The survey also included responses regarding capital expenditures: fifty-eight percent made capital outlays recently, primarily on equipment and vehicles. Future capital expenditure plans decreased slightly from January levels.

Additionally, sales trends showed negative results with nominal sales falling two points from January. Inventory reports remained unchanged but indicated low stock levels.

Overall price increases were prevalent across various sectors including finance and retail. Among those reporting profit changes, weaker sales were often cited as causing lower profits while higher sales volumes contributed to increased profits for others.

Financing difficulties remain stable with only minor changes from previous months regarding loan accessibility and interest rates being an issue for some businesses.

The NFIB Research Center has been collecting data through surveys since the late twentieth century to provide insights into small business economic trends.