Small Business Checkpoint on Productivity Trends

This report provides an analysis of small business productivity trends as of February 2026, focusing on profitability, hiring signals, and technology spending. It outlines that small business profitability improved by 1.2% year-over-year, marking the strongest reading since March 2025, despite ongoing cost pressures. The report indicates cautious but stabilizing hiring signals, with an increase in payments to hiring firms, although payroll growth per client remained negative. Notably, small business spending on technology services, including AI, surged over 14% year-over-year, with small retailers leading this growth. The report also highlights that while business formation is rising, many new firms are prioritizing productivity gains over workforce expansion. Additionally, it discusses the uneven hiring landscape and the cautious outlook for small business labor, emphasizing that while conditions are gradually easing, significant labor shortages persist. Overall, the report presents a comprehensive view of the current state of small businesses and their strategies for navigating economic challenges.