U.S. NFIB Small Business Optimism Index (February 2026)

Small Business Optimism Fell in February as Uncertainty Remained Elevated

• The NFIB's Small Business Optimism Index fell 0.5 points to 98.8 in June, disappointing market expectations for a modest uptick to 99.6. However, the index remained stable on aggregate relative to history.
• Four out of the ten index subcomponents deteriorated during the month, three improved, and three remained unchanged. The largest decline came from expectations for higher sales in six months' time (down 8 points to 8%), although the largest improvement came from reports of higher earnings in the current quarter (up 7 points to -14%). Expectations for the economy to improve also fell during the month (down 3 points to 18%).
• The net share of businesses planning to increase employment fell for a third consecutive month (down 4 points to 13%). The share of firms with unfilled job openings rose 2 points to 33% but has remained broadly unchanged for the past year. Quality of labor concerns were roughly unchanged in February, with 15% of business owners identifying this as their top business problem.
• The net share of firms currently increasing employee compensation rose 2 points to 34%, while the net share planning to do so over the next three months was unchanged at 22%. The share of businesses 'raising' average selling prices fell 2 points to 24% while the share of those 'planning’ to raise average selling prices fell 4 points to 28%.

Key Implications

• Small business confidence fell modestly for a second consecutive month in February as uncertainty remained elevated. Expectations for the economy and sales to improve over the coming months both fell during the month. However, small businesses appear to be in solid health on aggregate, with the share of survey respondents reporting higher earnings in the current quarter hitting a 4+ year high in February.
• The crux of small business consternation primarily stems from elevated tariff uncertainty, with taxes reported as the top concern among small businesses for the third consecutive month after rising consistently through 2025. The recent Supreme Court ruling against IEEPA tariffs, while offering a modest near-term reprieve, has also raised uncertainty with respect to where tariffs will sit roughly 4 months from now when the administration's 10% Section 122 tariffs expire. When combined with the recent spike in energy prices related to the conflict in the Middle East, it seems likely that hesitation to increase capital outlays and employment – the indexes for which are both trending near multi-year lows – will continue over the near-term.         

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