The National Federation of Independent Business (NFIB) released its Small Business Optimism Index for May, revealing a three-point increase to 98.8. This figure is slightly above the long-term average of 98 over the past 51 years. Key factors contributing to this rise include improved expectations for business conditions and sales growth. However, the Uncertainty Index also rose by two points to 94.
“Although optimism recovered slightly in May, uncertainty is still high among small business owners,” stated NFIB Chief Economist Bill Dunkelberg. He added that “while the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth.”
Taxes emerged as a primary concern for small business owners, with 18% identifying it as their most pressing issue. This marks an increase of two points from April and represents the highest ranking for taxes since December 2020.
Katie Burns, NFIB State Director, commented on the findings: “While small business owners are feeling a bit more hopeful, concerns about taxes have surpassed inflation and hiring challenges. Now is the time for Congress to stand up for Main Street and make the Small Business Deduction permanent.”
Other notable survey results showed that a net 1% of owners considered current inventory stocks as “too low,” marking a significant increase from April and reaching levels not seen since August 2022. The expectation of better business conditions rose by ten points to a net 25%, while anticipated higher real sales volumes increased by eleven points to a net 10%.
The survey also highlighted labor market issues. A seasonally adjusted 34% of small business owners reported unfilled job openings in May, unchanged from April. Among those hiring or attempting to hire, 86% cited difficulties finding qualified applicants.
Labor costs were identified as a significant problem by 9% of respondents, increasing by one point in May. Additionally, compensation changes were noted with a seasonally adjusted net 26% reporting increased compensation levels—a decline from April’s figures.
Regarding financial aspects, five percent of owners named financing and interest rates as their top concern in May—an uptick from April’s data.
Overall sentiment regarding expansion remained low historically despite a slight improvement; ten percent viewed it as an opportune time for growth—up one point from April.
The NFIB has been collecting Small Business Economic Trends data through quarterly surveys since late 1973 and monthly surveys since 1986. The latest report reflects data collected during May 2025.
