A measure of optimism among small business owners has increased, but concerns persist over inflation, labor shortages and other challenges.

“Small business owners remain doubtful that business conditions will get better in the coming months. They continue to struggle with historic inflation and labor shortages that are holding back growth,” said Bill Dunkelberg, chief economist of the National Federation of Small Businesses. “Despite their economic challenges, owners are working hard to create new jobs to strengthen the economy and their firms.”

The NFIB reported its Small Business Optimism index rose six-tenths of a point between January and February. But at 90.9, the index remains below the 49-year average of 98. The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners.

For February, five of 10 components of the index advanced while four retreated and one remained unchanged.

The proportion of NFIB members responding to the survey upon which the February index was based who expect the economy to improve fell two points. At a net negative 47 percent, more respondents anticipated worsening conditions.

A net 21 percent reported plans for capital outlays, unchanged from January. A net 6 percent said they consider now a good time to expand, down a point.

A net 17 percent reported plans to increase staffing, down two points. A net 47 percent reported hard-to-fill job openings, up two points. Among those hiring or trying to hire, 90 percent reported few or no qualified applicants.

The share of respondents who expected increased sales rose five points. But at negative 9 percent, more expected decreased sales.

Expectations for profits rose three points. But at a net negative 23 percent, more respondents expected lower profits. Among those reporting higher profits, 55 percent credited increased sales and 14 percent higher prices. Among those reporting lower profits,
23 percent blamed weaker sales and 23 percent cited higher materials costs.

The proportion of respondents planning to increase inventories rose a point to a net negative 7 percent. A net 4 percent said existing inventories were too low, down three points.

Asked to identify their single most important business problem, 28 percent of respondents cited inflation. A net 38 percent reported raising average selling prices, up four points from January. Prices hikes were most frequent in the retail, finance and manufacturing sectors. Another 21 percent of respondents cited quality of labor as their most pressing problem.