NFIB Small Business Optimism Index Improves in May, but Uncertainty Rises

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its latest Small Business Optimism Index (SBOI). The index rose three points in May to 98.8, slightly above its 51-year average of 98.

The increase was driven primarily by improved expectations for business conditions and sales. Meanwhile, the Uncertainty Index rose two points from April, reaching 94.

Taxes were cited by 18% of small business owners as their single most important problem—up two points from April—making it the top concern. This is the first time taxes have ranked as the most significant issue since December 2020.

Other key findings from the May SBOI include:

• A net 1% (seasonally adjusted) of owners said their current inventory levels were “too low,” up seven points from April and the highest reading since August 2022. This marks the largest one-month increase in the history of the survey.
• The net percentage of owners expecting better business conditions rose 10 points to 25% (seasonally adjusted).
• Expectations for higher real sales volumes increased 11 points to a net 10% (seasonally adjusted), the biggest contributor to the overall gain in optimism.
• Twenty-two percent (seasonally adjusted) plan capital outlays in the next six months, up four points from April and the highest level recorded so far in 2025.
• Sixteen percent of owners cited labor quality as their top problem, down three points from April.
• Inflation was named the top issue by 14% of owners, unchanged from the previous month.
• When asked about the overall health of their business, 14% rated it as excellent (up one point), 55% as good (down one point), 28% as fair (up one point), and 4% as poor (unchanged).

Commenting on the results, NFIB Chief Economist Bill Dunkelberg said:

“Although optimism recovered slightly in May, uncertainty remains high among small business owners. The economy will continue to stumble along until the major sources of uncertainty are resolved. Still, owners reported more positive expectations for business conditions and sales growth.”