BISMARCK– Small business optimism continued to improve this past December as uncertainty dropped to its lowest level since June 2024, according to the latest Small Business Optimism Index released by the National Federation of Independent Business.

The NFIB Small Business Optimism Index rose 0.5 points in December to 99.5, remaining above its 52-year average of 98. Of the index’s 10 components, two increased, three decreased and five were unchanged. An increase in the number of owners expecting better business conditions primarily drove the overall rise in optimism.

The Uncertainty Index declined seven points from November to 84, marking its lowest reading since June 2024.

“While the optimism numbers are moving in the right direction, small business owners are still proceeding cautiously,” said NFIB Chief Economist Bill Dunkelberg. “Even as concerns about taxes ease, owners anticipate improved economic conditions in 2026 due to waning cost pressures, easing labor challenges and increased capital investment.”

In North Dakota, small business owners remain guarded but show signs of increased investment activity, according to NFIB North Dakota State Director Don Larson.

“While the federal report highlights a pick-up in capital investments, North Dakota’s small business owners remain cautious,” Larson said. “For our state to thrive in 2026, we must address the 19 percent of owners who still cite labor quality as their top concern, ensuring our workforce can meet the demands of our growing industries.”

Key findings from the December report include:

-20% of small business owners cited taxes as their single most important problem, up six points from November and the highest level since May 2021.

-The net percent of owners expecting better business conditions rose nine points to a seasonally adjusted 24%, contributing the most to the increase in the Optimism Index.

-Inventory gains increased six points to a net negative 1%, the highest reading of the year.

– 64% of owners reported supply chain disruptions affecting their businesses to some degree, unchanged from November.

-A net 31% of owners reported raising compensation, up five points from November, while 24% plan to raise compensation in the next three months.

– 13% of owners reported it is a good time to expand their businesses, unchanged for the second consecutive month and remaining below levels typically seen during economic expansions.

Capital spending showed modest improvement, with 56% of owners reporting capital outlays in the past six months, up four points from November. Of those expenditures, 37% were for new equipment, 27% for vehicles and 19% for facility improvements or expansions.

Despite the gains, actual sales remain below historical averages. A net negative 8% of owners reported higher nominal sales over the past three months, though this figure improved slightly from November.

The NFIB Research Center conducts monthly surveys of small business owners nationwide.