The National Federation of Independent Business’ February Jobs Report shows the Small Business Employment Index rose nearly 1 point to 103.5, signaling continued tightness in the labor market after January consolidated gains measured in December.
The reading is 2.3 points above the 2025 average of 101.2 and 3.5 points above the historical average of 100.
In February, 33 percent of small business owners reported job openings they could not fill, up 2 points from January. Unfilled job openings remain above the historical average of 24 percent. Twenty-eight percent reported openings for skilled workers, up 3 points, while 10 percent reported openings for unskilled labor, unchanged from January.
“February’s numbers show a growing tightness in the small business labor market,” Chief Economist Bill Dunkelberg said. “While the overall market remains in balance, employers need more skilled workers to fill open positions.”
NFIB State Director Rosemary Elebash said the national report reflects conditions in Alabama.
“A staffing shortage can mean longer wait times, shorter operating hours, fewer services and existing employees who are stretched thin,” Elebash said. “Multiply that across hundreds of small businesses in every city and town in the state, and it’s easy to see how this really affects everybody.”
A net 12 percent of owners plan to create new jobs in the next three months, down 4 points from January and the lowest level since May 2025. Despite the decline, hiring plans remain close to the average of a net 11 percent.
Overall, 54 percent of owners reported hiring or trying to hire in February, up 4 points from January. Forty-six percent of owners — 85 percent of those hiring or trying to hire — reported few or no qualified applicants for the positions they were trying to fill, up 2 points. Twenty-five percent reported few qualified applicants, unchanged from January, and 21 percent reported none, up 2 points.
In February, 15 percent of small business owners cited labor quality as their single most important problem, down 1 point from January and the fourth consecutive monthly decline. The last time labor quality was this low was April 2020. Labor costs remained at 9 percent as the most important problem cited by small business owners.
A net 34 percent of small business owners reported raising compensation in February, up 2 points from January and the highest level since March 2025. A net 22 percent plan to raise compensation in the next three months, unchanged from January.
