Small business optimism reaches 11-month high

Small business optimism reached its highest mark in 11 months in July amid a rise in hiring plans, according to the National Federation of Independent Business. .NFIB’s Small Business Optimism Index increased 2.4 points to 99.8 last month, higher than its 52-year average of 98.0 and the highest mark in nearly a year. The small business employment index increased after four straight months of decline, up to 102.1 in July. “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,” said NFIB Chief Economist Bill Dunkelberg. “Although uncertainty is currently elevated, Main Street anticipates that business conditions will continue to improve.”Thirty-six percent of small business owners had job openings they were unable to fill in July, up four points from June and its highest reading since June 2025. Twenty-seven percent of owners cited labor quality or availability as their most pressing problem, up eight points from the previous month and 15 points higher than the historical average of 12 percent. A seasonally adjusted net 20 percent of owners expect to create new jobs over the next three months, up nine points from June, a nearly four-year high and nine points higher than average. Twenty-five percent of owners are looking to make capital outlays in the next six months, up five points from June and its highest mark since late 2024. The index tracking uncertainty increased two points to 91, 23 points higher than its average of 68. The rise was fueled by an increase in owner uncertainty over expansion and capital expenditure plans. Reports of inflation as the most pressing issue fell for the first time this year, down seven points to 14 percent.Real sales expectations and reports of insufficient inventory levels both fell two points. Owners increasing average selling prices dropped seven points from June to a net 31 percent, following four straight months of increases. A net 28 percent expect to increase prices, down four points from June. Owners expecting higher real sales volumes over the next quarter dropped two points from June to a net 7 percent. The frequency of positive profit trends reports increased four points to a net negative 16 percent.