The National Federation of Independent Business (NFIB) Small Business Optimism Index rose 1.7 points in July to 100.3. In contrast to the Optimism Index, the Uncertainty Index increased by eight points from June to 97. Twenty-one percent of small business owners reported labor quality as their single most important problem, up five points from June and ranking as the top problem.
“Optimism rose slightly in July with owners reporting more positive expectations on business conditions and expansion opportunities,” said Bill Dunkelberg, chief economist for NFIB. “While uncertainty is still high, the next six months will hopefully offer business owners more clarity, especially as owners see the results of Congress making the 20 percent Small Business Deduction permanent and the final shape of trade policy. Meanwhile, labor quality has become the top issue on Main Street again.”
Key findings include:
- In July, there was a notable improvement in overall business health. When asked to rate the overall health of their business, 13 percent reported excellent (up five points), and 52 percent reported good (up three points). Thirty-one percent reported the health of their business was fair (down four points), and 4 percent reported poor (down three points).
- The percent of small business owners reporting poor sales as their top business problem rose one point to 11 percent. This is the highest level of poor sales since February 2021.
- The net percent of owners expecting better business conditions rose 14 points from June to a net 36 percent (seasonally adjusted).
- In July, 16 percent (seasonally adjusted) reported that it is a good time to expand their business, up five points from June.
- Eleven percent of owners reported that inflation was their single most important problem in operating their business, unchanged from June’s lowest reading since September 2021.
As reported in NFIB’s monthly jobs report, a seasonally adjusted 33 percent of all small business owners reported job openings they could not fill in July, down three points from June and the lowest level since December 2020. Of the 57 percent of owners hiring or trying to hire in June, 84 percent reported few or no qualified applicants for the positions they were trying to fill. A seasonally adjusted net 14 percent of owners plan to create new jobs in the next three months, up one point from June.