U.S. small-business optimism climbs to 11-month high as hiring plans rise

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US small-business optimism rises

Highlights

NFIB Small Business Optimism Index rises 2.4 points to 99.8 in July, its highest since August 2025 and above its 52-year average of 98.0.
The share of owners planning to create new jobs jumps 9 points to 20%, the highest since October 2022, despite July's drop in nonfarm payrolls.
Labor quality or availability is the top problem for 27% of owners in July, well above the historical 12%, as job openings they cannot fill reach 36%.

July survey shows stronger hiring appetite

As reported by Reuters, citing the National Federation of Independent Business, its Small Business Optimism Index rises 2.4 points to 99.8 in July, the highest reading since August 2025 and above its 52-year average of 98.0.

The group says its employment index rebounds 1.9 points to 102.1 after four straight monthly declines. The share of owners planning to create new jobs over the next three months jumps 9 points to 20%, the highest level since October 2022, suggesting July's drop in nonfarm payrolls could prove temporary.

At the same time, the survey's uncertainty index increases 2 points to 91 as more owners say they are unsure whether this is a good time to expand. Owners also remain uncertain about capital spending plans, and NFIB Chief Economist Bill Dunkelberg says uncertainty remains high, which he links most likely to the status of the war with Iran.

Worker shortages remain the main constraint

The stronger hiring outlook is still colliding with a tight labor supply. The share of owners reporting job openings they cannot fill rises 4 points to 36%, the highest level since June 2025, with shortages affecting both skilled and unskilled workers.

The report comes after the government says last week that nonfarm payrolls unexpectedly decline in July, with large downward revisions to May and June. Some economists attribute that weakness to worker shortages, while the labor force decreases by more than a million this year amid retirements and an aggressive crackdown on illegal immigration by President Donald Trump's administration.

The NFIB survey shows labor quality or availability is the single biggest problem for small business owners in July, cited by 27% of respondents, far above the historical average of 12%. Comments from businesses in industries including construction and agriculture point to difficulty finding qualified workers, while inflation concerns ease, with 14% of firms naming it as their most important problem, down 7 points from June.

Our earlier coverage of the Iran conflict focused on how the fallout from the U.S.-Israeli strike reshaped risks around the Strait of Hormuz, shipping, and broader investor confidence in U.S. assets. We also noted that markets were struggling for direction amid uncertainty over a possible reopening deal, while a weaker July jobs report shifted interest-rate expectations ahead of key inflation data and earnings.

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