NFIB Small Business Optimism Index Slips in May

On Tuesday, the National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index (SBOI) fell 0.6 points to 95.3 in May. This is below the 52-year average of 98 and marked the third consecutive month below the long-term average.

The NFIB Uncertainty Index rose 3 points to 91, remaining well above its historical average of 68.

Other key highlights from the May SBOI include:

• Employment Index: The Index was essentially flat at 100.3 in May, compared with 100.4 in April. This marked the third consecutive monthly decline. The reading was below the 2025 average of 101.2 but slightly above the historical average of 100.0.
• Job openings: 29% of owners, seasonally adjusted, reported job openings they could not fill, down 5 points from April and the lowest level since May 2020.
• Hiring plans: A seasonally adjusted net 9% of owners plan to create new jobs in the next three months, down 4 points from April and the lowest level since May 2020.
• Labor quality: 13% of small business owners cited labor quality as the single most important problem, down 5 points from April and the lowest level since December 2016.
• Labor costs: 14% of business owners reported labor costs as their single most important problem, up 5 points from April and the highest reading in the survey’s history.
• Supply chains: 70% of small business owners reported that supply chain disruptions affected their business to some extent, up 6 points from April.
• Selling prices: The net share of owners raising average selling prices rose 6 points to a seasonally adjusted net 36.0%, the highest reading since March 2023. A seasonally adjusted net 34.0% plan to increase prices, up 7 points from April and the highest reading since July 2022.

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

“AI investment spending has contributed to some excitement in the economy. Despite the enthusiasm around AI, the overall picture is divided. More small business owners are struggling with significant and unpredictable hikes in fuel prices, which are more challenging for small businesses to pass on to their customers compared to their larger corporate competitors.”