The NFIB Small Business Optimism Index, released monthly by the National Federation of Independent Business (NFIB) rose 1.7 points in July to 100.3, slightly above the 52-year average of 98, signaling a modest boost in confidence among small business owners. This increase reflects stronger expectations for better business conditions and expansion opportunities in the months ahead. However, the NFIB Uncertainty Index also jumped eight points to 97, underscoring ongoing concerns about economic unpredictability.
The July survey revealed a shift in overall business health: 13% of respondents rated their business as excellent (up five points), and 52% rated it good (up three points). Despite higher optimism, labor quality again topped the list of concerns, cited by 21% of owners—up five points from June. Thirty-three percent reported having job openings they couldn’t fill, with 84% of those hiring stating that there were few or no qualified applicants available.
Sales expectations presented a mixed picture. The net percentage of owners expecting better business conditions rose 14 points to 36%, comfortably above the historical average. However, expectations for higher real sales volumes dipped slightly, and a net negative 9% reported higher nominal sales over the past three months. Inflation remained a steady concern, with 11% of owners calling it their biggest issue, unchanged from June.
Capital spending showed modest improvement, with 22% of owners planning outlays in the next six months, and 55% reporting recent investments—mostly in equipment and vehicles. Wage pressure has cooled slightly, with fewer owners planning compensation increases. Meanwhile, only 4% reported financing and interest rates as their top concern, and just 25% said they borrow regularly—a historically low level.
NFIB Chief Economist Bill Dunkelberg
“Optimism rose slightly in July with owners reporting more positive expectations on business conditions and expansion opportunities,” said NFIB Chief Economist Bill Dunkelberg in a press release about the report. “While uncertainty is still high, the next six months will hopefully offer business owners more clarity—especially as Congress finalizes key policies like the permanent 20% Small Business Deduction and trade legislation.”
The NFIB’s monthly survey continues to reflect the pulse of Main Street. While small business owners are showing cautious optimism, they remain watchful of labor challenges, inflationary pressures, and policy developments that could shape the second half of 2025. The report is released on the second Tuesday of each month.
The entire report is available here.
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