NFIB Small Business Optimism Survey

Data Sentiment

Source: NFIB
Source Link: https://www.nfib.com/
Frequency: Monthly
Next Release(s): October 14th, 2025 6:00 AM

Latest Updates

The NFIB Small Business Optimism Index this morning presented a slightly more optimistic view of small business conditions, with the headline index edging up 0.5 pts to 100.8 in August, the highest since January, and mostly in line with expectations of a reading of 101. Over the last year, small business sentiment has been volatile, but the broad trend in the data suggests that small business owners are feeling better than they did when supply chain issues and inflation were at their peak in 2021-2022. That is, in large part driven by an improvement in soft data, which was only temporarily shaken by the tariff volatility earlier this year.

NOTE: It is worth noting that the NFIB is an advocacy group that often reflects the concerns of small business owners who tend to lean more conservative, and its survey is sometimes viewed through that lens. That said, the index is widely followed across the political spectrum as a gauge of small business sentiment.

Just as we have seen in the previous months, the improvement in the survey’s soft data points since the 2024 election has been the basis for the improvement in the headline index. While the subindexes tracking the outlooks for expansion and general business conditions eased in August, they remain at their highest levels since the beginning of the year, with the former at 14 and the latter at 34. The hard data points remain negative but are slowly improving. The subindex tracking actual earnings trends has been one key indicator rising over the last two years, and in August, it improved 3 pts to -19, the highest since March 2023. The actual sales index trend has been similar, but in August, it maintained a reading of -9.

The improvement in earnings might be linked to an easing in price pressures in August. Both of NFIB’s price indexes indicated that this might be the case. The subindex tracking current price changes dropped -3 pts to 21 in August, the lowest reading since October 2024, and the indicator tracking expected price increases eased -2 pts to 26, the lowest since January. The moves this past month suggest that the near-term upward pressure on prices from new tariffs has receded, though it’s worth noting that these indexes are still above their long-run averages.

Small business employment trends broadly point to some weakness in hiring within that segment of the economy. The subindex tracking actual employment changes fell -3 pts to -5, and has been negative for the last four months. The last time this index trended this way was in the summer of 2024 when the Fed cut by 50 bps. The index tracking hiring plans was a bit rosier, rising 1 pt to 15, the highest since February. One index that saw a larger move was the measure tracking qualified applicants. It fell -5 pts to 43, the lowest it has been since June 2020. This index's decline is a signal that labor markets are easing since any shift in the quality of the labor supply would be a gradual one that wouldn’t show up in survey data like this.

Amid the challenges seen in employment and inflation, the August NFIB survey pointed to a brighter spot in financing costs, where businesses reported some relief. The average interest rate paid (as reported by small business owners) dropped -0.6 ppts to 8.1% last month, the lowest average reported since March 2023. The easing in financial conditions is likely one of the key drivers of optimism and is likely to continue in September as bond markets see yields drop early this month in response to an increase in Fed rate cut expectations. The 10-year yield is down almost -20 bps so far in September.

Markets have been especially tuned into the trend in interest rates when it comes to investing in smaller-sized firms. The Russell 2000 ETF (IWM) saw its best month since November 2024 (when the results of the election sparked a broad market rally) in August, rising 7.2%. Small caps have started off the month well, but are facing a bit of a drop today in the morning trading session (around -0.9%) since Treasury yields are slightly higher. The big picture for investors in the NFIB survey is the following: it seems that most of the weaker indicators in employment and sales/earnings can be dismissed for the positives in a gradual decline in price pressures and better financial conditions.

Source
The NFIB Small Business Optimism Index rose 1.7 pts to 100.3 in July 2025, above the 52-year average of 98, driven by improved expectations for business conditions and expansion plans.
- A net 36% expect the economy to improve (+14 pts MoM), while 16% say it’s a good time to expand (+5 pts).
- Hiring plans rose to a net 14% (+1 pt), though current job openings fell to 33% (-3 pts), the lowest since Dec 2020 but still above average.
- Capital spending plans increased to 22% (+1 pt), and inventory plans rose to 1% (+2 pts).
- Expected real sales slipped to 6% (-1 pt), and earnings trends remained weak at -22% (unchanged).
- The Actual Price Changes index fell -5 pts to 24, the lowest since January, and the Price Plans index fell -4 pts to 28, the lowest in three months.
- Inflation as the top concern stayed at 11%, while labor quality rose as the top issue at 21% (+5 pts).
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The NFIB Small Business Optimism Index edged down -0.2 pts to 98.6 (vs 98.7 expected) in June 2025, remaining slightly above the 51-year average, as rising inventories and muted sales expectations weighed on sentiment.
- Expected business conditions fell -3 pts to 22, while expected real sales volumes dropped -3 pts to 7. The actual earnings and actual sales indexes both improved but were still negative.
- The Actual Price Changes index increased 4 pts to 29, the highest since February, and the Price Plans index ticked up 1 pt to 32, the highest since March 2024.
- Inflation as the top problem fell to 11%, the lowest since Sep 2021, while taxes rose to 19%, ranking as the top concern for small businesses.
- The Actual Employment index dropped -6 pts to -8, the lowest reading since August 2020. Despite that, hiring plans held steady, and the Job Openings index actually increased 2 pts to 36.
- Labor quality remained the top non-tax concern (16%), though fewer firms saw it as the most important issue than in prior years; labor cost concerns ticked up to 10%.
- The share of owners reporting current inventories as “too high” rose to 12%, while those saying “too low” fell to 7%, contributing the most to the index decline.
- Compensation plans saw a sharp rise, with a net 33% reporting pay increases (+7 pts MoM), the biggest monthly jump since Jan 2020. This may reflect the increasing costs associated with replacing foreign-born workers.
Source
The NFIB Small Business Optimism Index rose 3.0 pts to 98.8 in May 2025, just above its 51-year average, driven by improved outlooks for sales and economic conditions.
- The net percent expecting better business conditions jumped 10 pts to 25, while expected real sales rose 11 pts to 10.
- Earnings trends worsened, falling -5 pts to -26, with weaker sales cited as the top reason.
- Hiring plans edged down 1 pt to 12, and job openings remained unchanged at 34%.
- Price hikes remained steady at a net 25%, while compensation plans rose 3 pts to 20 despite a sharp drop in actual wage hikes.
- The Price Plans index increased 3 pts to 31, the highest since March 2024.
- Inventory sentiment rose sharply, with 1% of firms saying current inventories are “too low” — the highest since August 2022.
Source
The NFIB Small Business Optimism Index dropped -1.6 pts to 95.8 in April as the small business economic outlook continues to slide.
- The net percent of respondents expecting better business conditions fell -6 pts to 15, the lowest since the 2024 election and down from a peak of 52 in December 2024.
- Readings of hard data did improve even though optimism soured. The Actual Earnings and Actual Sales indexes both increased, up 7 pts to -21 and up 3 pts to -8, respectively.
- The price indexes both eased slightly but remain elevated historically. The Actual Price Changes index fell -1 pt to 25, and the Price Plans index fell -2 pts to 28. Neither readings are 2025 lows.
- The Actual Employment index improved back to positive, up 2 pts to 1, but there is still very little strength in small business hiring. The Job Openings index signaled weaker hiring demand as the index fell -6 pts to 34, the lowest since September 2024.
- Indicators of wage growth weakened, especially in the Compensation Plans index which fell -2 pts to 17, the weakest since March 2021.
- Short-term interest rates remained elevated for small businesses as the NFIB found no change in rates in April compared to March with another 8.9% reading.
Source
The Small Business Optimism Index fell for the third month in a row, dropping -3.3 pts to 97.4 in March, below expectations of a smaller decline to 98.9. The rise since the election, driven by a sudden improvement in soft data in response to Trump’s victory, has been cut by over 7 pts in the first three months of 2025. The pain is unlikely to end there. This survey was completed before the announcement of US reciprocal tariffs which has been incredibly bearish for small caps. The fundamentals for smaller firms in the face of tariffs are bleak and should prevent a “buy the dip” moment.

As I highlighted in my analysis of the February NFIB report, the Trump administration’s pursuit of protectionism has caused small business owners to temper the optimistic attitudes they reported in December when sentiment was boosted by lower taxes and deregulation in the coming year. The General Business Conditions Outlook index is the main index that saw a post-election surge, and that has fallen another -16 pts to 21 in March. In total, the index has fallen -31 pts through the first quarter of 2025. The outlook is coming more in line with the measures of actual sales and actual earnings which both remain negative. In fact, the Actual Earnings index fell -4 pts in March to -28, the lowest since October 2024.

The movement in the price indexes suggests that there wasn’t yet a broad concern that tariffs would force small business owners to increase prices. The Actual Price Changes index backed off -6 pts to 32, an important reversal from what looked like a spike in pricing pressures coming from small firms in February. However, the reading is still the 2nd-highest since June 2024 and indicative of a gradual upward trend. Price expectations have seen a smoother increase over the course of Q1 2025, up 1 pt to 30 in March, and are now at the highest since March 2024. I expect these indexes to see larger moves up in the April survey as the reciprocal tariffs (if put in place) would be a broad-based increase in costs at a time when earnings for small businesses are consistently trending lower.

The employment indexes showed a similar trend as the price indexes. The Current Employment index improved 2 pts to -1, partly reversing a -4 pt decline in February. While a flat trend in actual hiring isn’t good, what is more concerning is that small businesses have reversed the increase in their hiring plans that was reported after Trump’s win. The Hiring Plans index peaked at 19 in December and is now down to 12 in March, the lowest since April 2024. For now the reading is positive, but the reaction to a sudden increase in nonlabor costs is likely to lead to a downturn in hiring expectations.

Indeed, employment will have to decline if those labor costs continue to trend the way they have been. The Actual Compensation Costs Index increased 5 pts to 38 in March, the highest since June 2024 and outpacing the Compensation Plans index by the widest margin since early last year. Small businesses consistently find themselves with a shortfall of qualified applicants, and this has pushed labor costs up in response. Paired with the rise in input costs that will come from tariffs, small businesses are looking at further margin compression if they don’t raise prices.

One avenue that small businesses could find some relief is in financing costs. President Trump has signaled several times that he wants Powell and the Fed to cut rates, and a sharp increase in market volatility could provide some relief is there is a flight to safety that causes bond yields to decline. In March, there was no relief as the NFIB measure of small business rates remained elevated at 8.9%, and early April trends suggest that relief this month could be minimal. Volatility caused a short-term decline in rates, but that has been completely reversed and the market continues to respect the inflationary pressures that are likely to come out of the tariffs that would keep the Fed on the sidelines. Additionally, as growth prospects sour, banks are likely to increase the risk premium on financing smaller firms which were already struggling pre-reciprocal tariff announcement.

Source
The NFIB Small Business Optimism Index fell -2.1 pts to 100.7 in February, below expectations of a smaller but similar decline to 101.0. The index is now down -4.4 pts from its post-election peak of 105.1. The decline in optimism has been paired with a rise in uncertainty that small business owners thought would ease following the election of Trump. The Uncertainty Index is up to 104 in February from the December low of 86 and similar to the uncertainty seen just before the election in October at 110. This uncertainty can be traced to the recent volatility in trade policy that has become a nightmare for small businesses in more ways than one.

NFIB Survey Data

The rise in the NFIB index after the election was a result of soft data, like indexes tracking outlooks, improving as Trump was expected to be a pro-small business leader. Notably, the General Business Conditions Outlook index surged 41 pts from October into November and reached an all-time high of 52 in December. Trump actually refers to this figure frequently in his press conferences. This index can be treated like the UMich Consumer Sentiment subindex that tracks Republican sentiment. The chart above shows how there were clear swings in 2021 and 2025 aligning with shifting leadership just like in the UMich sentiment data.

Hard data in the NFIB survey, tracking actual changes in business fundamentals, remain largely negative for small businesses unlike the soft data. The Actual Earnings and Actual Sales indexes did both see minor improvements in February, up 1 pt and 2 pts respectively, but were both still just as negative as they were in the previous administration, at -12 and -24. There hasn’t been an immediate relief for small businesses that some outlook measures may have hoped for, and it may not be coming.

Changes in trade policy have become the new focus for small businesses, increasing uncertainty and damaging the hopeful outlook. Rising costs are likely to become a new problem for small businesses as supply chains are gummed up by tariffs and general uncertainty in trade policy. As a result, inflation is reemerging as a concern. The Actual Price Changes index jumped 10 pts in February to 32, the highest since May 2023 and the largest one month jump since April 2021. As current prices change, small businesses will be increasingly forced to increase prices in the future especially if tariffs are likely to stay in the place. As a result, we see the Price Plans index tick up 3 pts to the highest since March 2023.

Trade uncertainty is also impacting small businesses’ demand for labor. Both the Actual Employment Changes index and the Hiring Plans index fell in February, down -4 pts to -1 and -3 pts to 15 respectively. The employment subindexes both improved in the post-election period alongside soft data which suggested that small businesses were looking to move forward with filling new positions with the expectation that Trump would bring on an improved business environment.

Instead, they are now looking at an increase in nonlabor costs that could crowd out potential investment in staff. As a result, plans to increase pay have soured with the Compensation Plans index down -2 pts to 18 in February and down -10 pts from the post-election peak in November. This highlights the effect of an artificial increase in supply chain costs. It causes small firms, which are typically running on thin margins and barely making a profit, to sacrifice investment elsewhere.

One thing that has improved for smaller firms is credit conditions through a mix of banks expecting deregulation and a decline in interest rates that has come from the rising expectations of slower growth. The rally in rates at the beginning of the year has subsided, and small business short-term interest rates fell back to 8.8% in February from a spike to 9.4% in January. Also, the Availability of Loans index improved another point to -2, the highest since February 2022. In general, however, borrowing costs are still high and loan availability low in a long-term context.

Source
The NFIB Small Business Optimism Index fell more than expected, down -2.3 pts to 102.8, below expectations of a smaller decline to 104.6.
- The small business business conditions outlook index remained strong despite pulling back slightly, down -5 pts to 47.
- Despite an optimistic outlook, measures of sales and earnings were unchanged in contractionary territory at -25 and -14 respectively.
The NFIB price indexes were also unchanged, remaining in the tight range they have been for the last two years.
- The Actual Price Changes index was unchanged at 24.
- The Price Plans index was unchanged at 28.
- While the indexes were static, 18% of owners reported that inflation was their single most important problem, down -2 ppts from December. The last time it was this low was in November 2021.
The employment indexes were mixed with a noticeable pick up in current employment was a slight tick down in hiring plans.
- The Current Employment index improved 4 pts to 1, the first positive reading since March 2023.
- The Hiring Plans index edged down -1 pt but is still above move 2024 readings.
- 35% of small business owners reported job openings they could not fill.
As rates rallied in December and January, small businesses reported a significant increase in borrowing costs. The actual interest rate paid on short-term loans was up from 8.7% in December to 9.4% in January. This is the highest interest rate small businesses have had to pay in January in over 20 years.
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NFIB Small Business Optimism: December 2024

The NFIB Small Business Optimism Index jumped 3.4 pts to 105.1 in December, the highest since October 2018 and well above expectations of an increase to 105.1. The main index surging is the Outlook for General Business Conditions which has increased 57 pts since the election to 52. That surge comes despite small businesses reporting declines in sales and earnings with those indexes both unchanged at -26 and -13 respectively. However, the Sales Expectations index has seen a rise to the headline index jump, up 26 pts to 22, the highest post-pandemic reading so far.

Both small business price indexes remained unchanged in December. Actual Price Changes ended the year at 24, just -1 pt off a year ago and the highest reading since June, and Price Plans sits at 28, down -4 pts from a year ago and the highest since May. With 20% of respondents listing inflation as the single most important problem, price pressures remain the top issue for small businesses.

The improvement in the small business outlook does seem to indicate that firms will look to increase hiring. The Hiring Plans index increased to 19, the highest since May 2023 and higher than the December readings in both 2022 and 2023. Actual hiring did not improve, however, with that index easing -2 pts to -3. Qualified labor supply is still a headwind for small business operations.

Small business wage pressures continued to gradually decline. The Actual Compensation Changes Index fell -3 pts to 29, the lowest since March 2021, and the Compensation Plans Index fell -4 pts to 24, reversing most of the increase it saw in November. The data suggests that qualified labor shortages are a problem for small firms that are keeping labor costs elevated.

Fed rate cuts appear to have helped small businesses in Q4. The net percent of respondents reporting higher interest rates paid dropped from 12% in September to just 1% in December. Similarly, the average interest rate paid by small businesses dropped -0.1 ppt to 8.7%, down from 10.1% in September but still the 2019 pre-pandemic December rate of 6.4%.

Source

NFIB Small Business Optimism Survey

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