U.S. Small Business Optimism Index Reaches 100.3 in July

United States, August 12, 2025

News Summary

The NFIB Small Business Optimism Index has seen a notable increase, climbing to a score of 100.3 in July, signaling a positive shift in small business sentiment. Despite lingering concerns over labor quality and economic uncertainties, a majority report improved business health and a growing willingness to hire. However, challenges such as rising pricing pressures continue to affect many sectors, notably construction and retail. Overall, the report reflects cautious optimism among small business owners as they navigate these complex dynamics.

U.S. Small Business Optimism Index Hits 100.3 in July 2025

In July 2025, the NFIB Small Business Optimism Index increased by 1.7 points to reach 100.3, showing confidence among small business owners despite labor and policy challenges. This figure exceeds the 52-year average of 98 and marks the highest index level since February 2025, indicating a modest recovery in business sentiment.

Labor Quality Remains a Major Concern

Despite the optimism, challenges persist in the labor market. Twenty-one percent of small business owners identified labor quality as their biggest problem, underlining the ongoing struggle to find qualified workers. A staggering 33% of job openings are unfilled, particularly impacting industries such as construction and retail. This suggests that the labor market’s recovery remains uneven and complicated.

Economic Uncertainty Contributes to Cautious Optimism

The Uncertainty Index also saw a rise, climbing eight points to 97. This increase reflects growing apprehension about the economic outlook, influenced by factors such as tariffs and fluctuating labor policies. Despite these concerns, 13% of business owners rated their overall business health as excellent, while 52% considered it good, suggesting an overall improvement in sentiment.

Job Creation Plans Indicate Growth

A net 14% of small business owners have plans to create new jobs in the upcoming three months, higher than the historical average of 11%. This intention to expand is a positive sign for the economy, showcasing that small businesses are still willing to invest in growth despite prevailing uncertainties.

Pricing Pressures and Inflation Concerns

Pricing pressures remain a challenge for many, with a net 28% of owners planning to raise prices. This reflects ongoing concerns about inflation, even as the proportion of those reporting higher average selling prices has declined. The survey revealed that 12% of owners reported lower average selling prices, while 37% noted higher prices, indicating a mixed pricing environment across the small business sector.

Investment Willingness Indicates Positive Outlook

Capital expenditure also saw a slight increase, with 55% of small business owners reporting investments over the past six months. This willingness to invest is a hopeful sign in the face of economic uncertainty, yet labor costs remain a significant concern for 9% of owners, despite a decrease in the number of respondents experiencing higher labor costs.

Sector-Specific Challenges and Opportunities

Some sectors are facing persistent inflationary pressures, notably agriculture and food distribution. Despite the challenges, there are expectations of continued demand in these areas. As small businesses navigate these complexities, many are closely monitoring ongoing policy risks, including the potential permanency of a 20% small business deduction, and how this may affect their operational strategies.

Conclusion

In conclusion, while small business sentiment has improved, the landscape remains complex and diverse. Various sectors are experiencing different challenges and the overarching economic environment carries significant external pressures. It is clear that as small businesses continue to adapt, their responses to these ongoing challenges will shape the future of the economy.

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Additional Resources

• Advisor Perspectives: NFIB Small Business Survey
• KFGO: US Small Business Optimism Up
• NFIB: Monthly Report
• Wikipedia: National Federation of Independent Business
• Google Search: Small Business Optimism Index