NFIB Small Business Optimism Index Rises in July

On Tuesday, the National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index (SBOI) rose 2.4 points to 99.8 in July. This was 1.8 points above the 52-year average of 98 and marked the highest reading since August 2025.

Of the 10 index components, eight increased, and two decreased. Hiring plans improved substantially and contributed most to the monthly increase. Real sales expectations and reports of inventory levels as “too low” both fell 2 points.

The NFIB Uncertainty Index rose 2 points to 91, remaining well above its historical average of 68. The increase reflected greater uncertainty among owners about whether it is a good time to expand and about capital expenditure plans.

Other highlights from the July SBOI include:

• Labor quality: 27% of owners cited labor quality or availability as their single most important problem, up 8 points from June and 15 points above the historical average of 12%.
• Job openings: 36% of owners, seasonally adjusted, reported job openings they could not fill, up 4 points from June and the highest reading since June 2025.
• Hiring plans: A seasonally adjusted net 20% of owners plan to create new jobs over the next three months, up 9 points from June. Hiring plans were at their highest level since October 2022 and 9 points above the historical average.
• Selling prices: The net share of owners raising average selling prices fell 7 points to a seasonally adjusted net 31% after four consecutive monthly increases. A seasonally adjusted net 28% plan to raise prices over the next three months, down 4 points from June.
• Inflation: 14% of owners cited inflation as their single most important business problem, down 7 points from June and the first decline this year.
• Capital expenditures: 25% of owners, seasonally adjusted, plan to make capital outlays over the next six months, up 5 points from June and the highest reading since December 2024.
• Sales expectations: The net share of owners expecting higher real sales volumes over the next quarter fell 2 points to a seasonally adjusted net 7%.

In remarks accompanying the release, NFIB Chief Economist Bill Dunkelberg said:

“Small business optimism rose again in July, with a significant increase in owners expecting to hire, accompanied by an improvement in plans to make capital expenditures. Although uncertainty is currently elevated; Main Street anticipates that business conditions will continue to improve.”