Sunflower State News

The NFIB Small Business Optimism Index saw a decline of 2.1 points in February, settling at 100.7. Despite this drop, the index remains above the long-term average of 98 for the fourth consecutive month, although it is 4.4 points below its recent peak in December.

"Uncertainty is high and rising on Main Street and for many reasons," stated NFIB Chief Economist Bill Dunkelberg. He noted that fewer small business owners expect better conditions in the next six months, and there is a decrease in those who view the current period as favorable for expansion. Inflation continues to be a significant issue, ranking just behind labor quality concerns.

NFIB Kansas State Director Dan Murray commented on the survey results: "The survey reveals that 55% of small business owners rate their business health as 'good,' but increasing uncertainty is a concern." He emphasized the challenges Kansas small businesses face with workforce shortages and rising costs, urging legislative reforms and tax cuts to support growth.

Key findings from the report include a ten-point drop in the net percentage of owners expecting economic improvement since January, now at a net 37%. The percentage of owners considering it a good time to expand decreased by five points to 12%, marking the largest monthly decline since April 2020.

Inflation was identified as the primary concern by 16% of business owners, down two points from January, while labor quality emerged as the top issue. Reports of raising average selling prices increased significantly by ten points to a net 32%, reflecting one of the highest increases recorded in recent history.

Labor costs also rose as a concern, reaching near-record levels at 12%. Additionally, job openings remained challenging to fill, with 38% of small business owners reporting unfilled positions in February—the highest level since August 2024.

The report indicates that capital outlays remained steady over recent months, with significant spending on new equipment and vehicles. However, plans for future capital investments showed slight declines.

Overall sales expectations dropped for the second consecutive month after an initial post-election surge. Inventory levels were reported as stable compared to January figures.

The NFIB Research Center has been collecting data on Small Business Economic Trends through quarterly surveys since late 1973 and monthly surveys since 1986. This latest survey was conducted in February 2025.