Small business confidence surged across the construction, manufacturing, retail, and service industries in January, with optimism levels exceeding the 51-year average, according to the latest Small Business Economic Trends survey from the NFIB Research Center. The quarterly report revealed that small businesses in these sectors were more optimistic than the overall small business population, signaling renewed confidence despite persistent economic challenges.
The overall Optimism Index for small businesses in January was 102.8. Manufacturing led the way with the highest optimism level at 106.2, followed by construction at 104.9, services at 103.1, and retail at 100.1.
The report indicates that small businesses anticipate stronger sales, increased growth opportunities, and an improved business climate. While labor pressures, supply chain disruptions, and rising operational costs have presented challenges in recent years, the latest data reflects a significant increase in optimism over the last quarter.
Industry Highlights:
Manufacturing emerged as the most optimistic sector, with an Optimism Index of 106.2—up 15.9 points from October, marking the largest quarterly increase. A net 21% of manufacturing firms expect stronger future sales, a 31-point surge from the previous quarter. Capital investment plans remained steady, with 27% of firms planning expenditures, the highest among all industries.
Construction showed a strong rebound, with its Optimism Index rising 7.8 points to 104.9. A net 32% of construction firms plan to hire in the next three months, the highest of the four industries and 14 points above the overall small business reading. Nearly half (49%) of construction firms reported unfilled job openings, with 42% seeking skilled workers. However, earnings trends in the sector remained negative at -23%, though still stronger than in other industries.
Retail optimism climbed 8.8 points to 100.1, the lowest among the four industries but still above historical averages. Hiring plans remained the weakest, with a net 12% of firms expecting to add staff. Inventory concerns persisted, as a net -9% of retailers reported stock levels as “too low.” However, sales expectations rose 26 points, with a net 18% of retailers forecasting increased demand.
Services businesses reported an Optimism Index of 103.1, up 9.1 points from October. A net -48% of owners in this sector expect the economy to improve, a substantial 52-point rebound from the prior quarter. Hiring plans dipped slightly to a net 15%, aligning closely with the overall small business outlook.
Despite lingering challenges, the latest NFIB report signals a turning point for small businesses in key industries, with rising confidence and expectations for improved business conditions in the months ahead.
