U.S. Small Business Optimism Index Reaches 100.3 in July

United States, August 12, 2025

News Summary

The NFIB Small Business Optimism Index has seen a notable increase, climbing to a score of 100.3 in July, signaling a positive shift in small business sentiment. Despite lingering concerns over labor quality and economic uncertainties, a majority report improved business health and a growing willingness to hire. However, challenges such as rising pricing pressures continue to affect many sectors, notably construction and retail. Overall, the report reflects cautious optimism among small business owners as they navigate these complex dynamics.

U.S. Small Business Optimism Index Hits 100.3 in July 2025, Signaling Business Confidence

The latest data shows a noteworthy shift in the U.S. Small Business Optimism Index, which has climbed by 1.7 points in July 2025 to reach 100.3. This increase marks the highest level since February 2025 and indicates a trend of improving business confidence among small enterprises. With the previous 52-year average resting at 98, the uptick in the index reflects a modest recovery in sentiment.

Despite this positive development, small business owners continue to face significant challenges. Twenty-one percent of owners have identified labor quality as the most pressing issue they encounter. The struggle to find skilled workers is causing concern in various sectors, particularly in construction and retail.

Accompanying this optimism is an increase in uncertainty about the economic outlook. The Uncertainty Index has risen by eight points to 97, driven by apprehensions surrounding tariffs and evolving labor policies. This signifies a combined feeling of cautious optimism alongside an awareness of potential challenges looming on the horizon.

The overall health of small businesses appears to be improving, with 13% of owners describing their business status as excellent and 52% as good. This shift indicates a positive change in how small business proprietors view their current situations, fostering a conducive environment for growth.

A significant net 14% of business owners plan to expand and create new jobs within the next three months, surpassing the historical average of 11%. However, the labor shortage remains a major hurdle, with 33% of job openings going unfilled.

Pricing pressures are also a predominant issue. A substantial net 28% of owners plan on raising their prices, a move prompted by ongoing inflationary concerns. Despite a decrease in the percentage of businesses reporting higher average selling prices, inflation continues to affect many sectors.

Investment remains a focal point as well. Capital expenditure has seen a slight boost, with 55% of small business owners reporting investment activities within the past six months, showcasing a willingness to invest in growth despite prevailing uncertainties.

Labor costs are still a considerable challenge, although the number of owners facing higher costs has slightly declined. Still, 9% of small business owners remain concerned about labor expenses.

Specific sectors, notably agriculture and food distribution, are confronting persistent inflationary pressures. Despite these issues, expectations remain high for sustained demand in these areas. Additionally, the pricing landscape remains mixed, with 12% of business owners reporting lower selling prices while 37% are experiencing price increases.

Furthermore, small businesses are vigilant regarding ongoing policy risks, such as the potential permanency of a 20% deduction for small businesses and its impact on operational strategies.

In conclusion, while the optimism among small businesses is on the rise, the economic environment remains complicated. Challenges persist across various sectors, and uncertainties related to policy and labor must be addressed as businesses plan for the future.

Frequently Asked Questions (FAQ)

Key Features of the U.S. Small Business Optimism Index July 2025

• Optimism Index: 100.3
• Labor Quality Concern: 21% of owners face this challenge
• Job Creation Plans: 14% net of owners intending to hire
• Pricing Pressure: 28% plan to raise prices
• Investment Spending: 55% reported recent capital expenditures

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Additional Resources

• Advisor Perspectives: NFIB Small Business Survey
• KFGO: US Small Business Optimism Up
• NFIB: Monthly Report
• Wikipedia: National Federation of Independent Business
• Google Search: Small Business Optimism Index