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 Reaches 100.3 in July 2025

The NFIB Small Business Optimism Index increased by 1.7 points in July 2025, reaching a score of 100.3, which is above the 52-year average of 98. This growth signals a modest recovery in business confidence, suggesting that small businesses are starting to feel more positive about their prospects despite ongoing challenges related to labor and policy.

This index figure represents the highest point recorded since February 2025, indicating an improvement in the sentiment among small business owners. Despite this encouraging news, twenty-one percent of them still cite the quality of labor as their primary concern, showing that finding qualified workers continues to be a significant hurdle.

Additionally, the Uncertainty Index has risen by eight points to a level of 97, pointing to increased worries about the economic horizon. Factors contributing to this unease include fluctuating tariffs and evolving labor policies that could impact business operations.

Business Health and Job Creation

The overall health of small businesses appears to be improving, with 13% of owners rating their business as excellent and another 52% as good. This reflects a better overall sentiment in the small business landscape. Moreover, a net 14% of owners plan to hire new employees in the next three months, surpassing the historical average of 11%. However, many businesses still face challenges, as 33% of job openings remain unfilled, predominantly affecting industries like construction and retail.

Pricing Pressures and Capital Expenditure

Pricing remains a complex issue for small businesses. A net of 28% of owners are planning to increase their prices amid continued inflation concerns. Alongside this, 37% of businesses reported higher prices, in contrast to 12% reporting lower average selling prices. This mixed pricing environment is influenced by persistent inflationary pressures impacting several sectors, especially in agriculture and food distribution where demand remains strong.

Despite these factors, investment in expansion is on the rise; 16% of business owners believe that now is a good time to expand, reflecting a 5-point increase. Additionally, 55% of small business owners reported capital expenditures over the last six months, showcasing a willingness to invest despite uncertainties in the economy.

Labor Costs and Sectoral Challenges

Even though fewer business owners are indicating increases in labor costs, this issue is still a concern for 9% of owners. Overall, the landscape remains complex, particularly as various sectors combat different challenges. While some businesses are optimistic about job creation and expansion, others are still struggling under the weight of inflationary pressures.

As small businesses navigate these uncertain waters, they continue to monitor ongoing policy risks that could influence their operational strategies. The potential permanence of a 20% small business deduction remains a point of contention, emphasizing the need for adaptability in their approaches.

Conclusion

In summary, the increase in the optimism index for small businesses in the U.S. reflects a cautious yet positive trend amidst ongoing challenges in labor quality, price pressures, and policy uncertainties. As business owners begin to see improvements in their overall health and potential for job creation, they remain vigilant in facing external economic hurdles.

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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