The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index rose by 0.5 points in August, reaching 100.8. This level is almost three points above the index’s 52-year average of 98. The increase was largely attributed to improved expectations for real sales.
Among the index’s ten components, four increased, four decreased, and two remained unchanged. The Uncertainty Index dropped by four points to 93 but stayed above historical norms, driven by reduced uncertainty around financing and planned capital spending.
“Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings,” said NFIB Chief Economist Bill Dunkelberg. “While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street.”
NFIB State Director Michael Smith commented on the situation in Colorado: “Here in Colorado, there is cautious optimism, especially in light of the tax relief delivered by Congress with the passage of the One Big Beautiful Bill Act. Unfortunately, state lawmakers have not made it easier for Main Street businesses to keep their doors open, and finding qualified applicants to fill open positions remains a real challenge.”
Survey results showed improvements in how business owners view their company’s health: 14% rated their business as excellent and 54% as good, both up from July. The share rating their health as fair declined to 27%, while those saying poor remained at 4%.
Labor quality continued as the most significant concern for small business owners at 21%. Thirty-two percent reported job openings they could not fill—down one point from July—with similar figures last seen in July 2020.
The share of owners expecting higher real sales volumes climbed six points to a net 12%. Meanwhile, inventory levels saw modest changes: a net zero percent viewed stocks as too low, up three points from July.
The portion raising average selling prices fell three points to a net 21%, marking this year’s lowest level so far. Profit trends also improved; although still negative at a net -19%, this was the best result since March 2023.
Borrowing activity slowed slightly with only 23% reporting regular borrowing—the lowest since November 2021—and short maturity loan rates averaged at 8.1%, down from July and representing a low since May 2023.
Sector-specific challenges remain acute in construction, where nearly half of businesses had unfilled job openings—though this figure dropped compared to both last month and last year—while other industries like wholesale and finance reported fewer difficulties filling roles.
Fifty-three percent of owners were hiring or trying to hire during August; among them, over four-fifths found few or no qualified applicants available.
In terms of compensation plans, a net 29% raised pay while a net 20% plan further increases over the next three months.
Capital investment activity saw slight growth: fifty-six percent made outlays recently with purchases focused on equipment (37%), vehicles (22%), facilities (17%), fixtures/furniture (13%), and property (5%).
Supply chain disruptions affected just over half of respondents but less so than earlier months; only three percent cited significant impact.
Looking ahead, price increases are expected by a seasonally adjusted net of twenty-six percent—down two points from July—while inflation concerns held steady for eleven percent of respondents as their top problem for another month.
Taxation remains an ongoing issue; seventeen percent cited taxes as their main problem with government regulation affecting nine percent—a slight uptick from previous findings.
The NFIB Research Center has been collecting data on small business economic trends through surveys since the early seventies. Respondents are randomly selected members and reports are released monthly based on survey results from the preceding month.
