The NFIB Small Business Optimism Index increased 1.7 points in July to 100.3, slightly above the 52-year average of 98. The greatest contributors to the increase were better business conditions and respondents feeling that now is a good time to expand. Labor quality emerged as the chief concern for small businesses, with 21% of respondents reporting it as their single most important problem, up five points from June’s report. 

“Optimism rose slightly in July with owners reporting more positive expectations on business conditions and expansion opportunities,” said NFIB Chief Economist Bill Dunkelberg. “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% 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: 

• Labor quality as small business owners’ top issue surges in July to 21%, becoming the single most important issue for small business. The five-point increase from June is the largest monthly increase since August 2022.   

• The Uncertainty Index rose significantly, up eight points in July to 97.  

• July had a notable improvement in overall business health, with 13% reporting excellent (five-point increase), 52% reporting good (three-point increase), 31% reporting fair (four-point decrease), and 4% reporting poor (three-point decrease).   

• Small business owners reporting poor sales as the single most important problem rose one point to 11%, the highest it’s been since February 2021. 

• The net percentage of business owners expecting better business conditions climbed 14 points from June to a net 36% (seasonally adjusted), well above the historical average.  

• Inflation as the single most important problem for small business owners remained unchanged from June at 11%, staying at its lowest reading since September 2021.

NFIB’s July jobs report shows that job openings have hit their lowest level since December 2020, with 33% (seasonally adjusted) of small business owners reporting openings they cannot fill. This figure is still well above the monthly historical average of 25%.

Business owners who reported hiring or trying to hire fell one point in July to 57%. Eighty-four percent of owners who are actively hiring or trying to hire reported few or no qualified applicants for open positions, down two points in July.   

In July, both planned and actual labor compensation declined, as a net 27% (seasonally adjusted) of business owners reported raising compensation, a six-point decline from June. A net 17% (seasonally adjusted) of business owners plan to raise compensation in the next three months, down two points from June.    

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in July 2025.