Small Business Owners More Optimistic as Conditions Improve

Small business owners are more positive about current business conditions, with many saying it is a good time to expand, according to the latest National Federation of Independent Business (NFIB) Small Business Optimism Index.

The index, which surveys economic trends among small businesses, rose 1.7 points to a level of 100.3 in July, slightly above the 52-year average of 98. That increase was driven by a notable improvement in overall business health, as 13 percent rated their business health as “excellent” (a five-point increase) and 52 percent said it was “good” (a three-point increase). Additionally, the net percentage of owners expecting better business conditions rose 14 points (36 percent) from June.

With more confidence in their business, a larger number of small business owners, 16 percent, said it was a good time to expand. That marked a five-point increase from June. Likewise, 22 percent of businesses are now planning capital outlays in the next six months, a six-point increase.

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

According to the survey, 21 percent of small businesses ranked labor quality as their most significant challenge, an increase of 5 percent compared with June. Poor sales were another notable concern, ranking as the top problem for 11 percent of small businesses, the highest level since February 2021.

The full NFIB Small Business Optimism Index is available here.