Key facts
- U.S. small-business sentiment reached an 11-month high in July.
- The NFIB Small Business Optimism Index rose to 99.8.
- Plans for hiring increased significantly, but labor shortages worsened.
- 36% of owners reported unfilled job openings, a record high.
- Labor availability was the top concern for small businesses.
U.S. small-business sentiment improved to an 11-month high in July, driven by increased owner optimism about hiring plans. The National Federation of Independent Business (NFIB) reported its Small Business Optimism Index rose 2.4 points to 99.8, surpassing the 52-year average. This suggests that a recent dip in nonfarm payrolls may have been temporary.
Despite the overall rise in optimism, the survey's uncertainty index climbed to 91, reflecting owners' hesitations about expanding and capital expenditure plans. NFIB Chief Economist Bill Dunkelberg cited the war with Iran as a likely cause for high uncertainty.
The employment index saw a rebound, with the share of owners planning to create new jobs in the next three months jumping to 20%, the highest since October 2022. However, this hiring push faces significant headwinds from persistent labor shortages. The percentage of owners reporting job openings they could not fill increased to 36%, the highest since June 2025, affecting both skilled and unskilled positions.
Labor availability was identified as the most critical problem by 27% of small business owners in July, far exceeding the historical average. Reports of inflation as the primary concern dropped for the first time this year, with only 14% of businesses citing it.
The decline in nonfarm payrolls reported by the government was partly attributed by some economists to worker shortages, exacerbated by a decrease in the labor force due to retirements and the Trump administration's immigration policies.