The National Federation of Independent Business (NFIB) reported a modest rise in small business optimism for August, with its Small Business Optimism Index increasing by 0.5 points to 100.8. This figure stands nearly three points above the index’s 52-year average.
According to NFIB, four of the ten components measured by the index increased, four decreased, and two remained unchanged. The most significant contribution to the index’s improvement came from a rise in owners expecting higher real sales volumes.
The Uncertainty Index dropped by four points to 93 but continued to remain above its historical average, mainly due to reduced uncertainty about financing expectations and planned capital expenditures.
“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.”
“There’s no question that stronger sales and earnings, along with the tax relief delivered by Congress, are playing a role in boosting small business optimism,” NFIB State Director Jason Espinoza said. “Main Street employers are feeling more confident in the health of the economy, despite lingering hiring challenges.”
In August, 14% of surveyed small business owners rated their business health as excellent (up one point), while 54% rated it as good (up two points). Twenty-seven percent described their business health as fair (down four points), and 4% as poor (unchanged).
Labor quality continued to be cited as the single most important problem for businesses at 21%. Thirty-two percent of all owners reported job openings they could not fill—down one point from July—marking the lowest level since July 2020. Openings were especially hard to fill in construction, manufacturing, and transportation sectors; however, construction saw a decrease from last month.
A net 12% of owners expected higher real sales volumes—a six-point increase from July—and this was the largest factor driving optimism upward. Reports of positive profit trends also improved by three points compared to July.
Regarding compensation, a seasonally adjusted net 29% reported raising pay in August, up two points from July. Twenty percent plan to raise compensation over the next three months.
Fifty-six percent of small business owners made capital outlays in the past six months—one point higher than July—but this remains low historically. Most investments went toward new equipment or vehicles.
Supply chain disruptions affected just over half of respondents but were down ten points from July; only three percent reported significant impacts.
Looking ahead, a net 26% plan price increases over the next quarter—a slight decrease—and inflation concerns held steady at eleven percent for a third consecutive month.
Financing conditions saw little change: Four percent named financing and interest rates as their main problem; twenty-three percent borrowed regularly—two points lower than July—and loan rates averaged 8.1%, down from previous months.
Taxation remained a concern for seventeen percent of respondents—the second highest ranking issue after labor quality—with government regulations following at nine percent.
The survey was conducted among randomly selected NFIB members during August 2025 and is part of ongoing monthly economic trend research initiated by NFIB since 1986.
