The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index increased by 0.5 points in August, reaching 100.8. This figure stands nearly three points above the index’s 52-year average of 98. According to the NFIB, four components of the index rose, four declined, and two remained unchanged. The primary driver behind the increase was a rise in owners expecting higher real sales.
The Uncertainty Index dropped by four points to 93 but stayed above its historical average. The decrease was attributed to less uncertainty regarding 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.”
NFIB State Director Katie Burns commented on local sentiment: “Our members here in Arkansas are cautiously optimistic. Stronger sales and earnings are boosting Main Street’s confidence, despite some ongoing labor challenges.”
Survey results showed improvements in how small business owners rate their business health: 14% described it as excellent (up one point), and 54% as good (up two points). Twenty-seven percent rated their business health as fair (down four points), while 4% called it poor (unchanged).
Labor quality continued to be the most significant challenge for small businesses, with 21% identifying it as their main problem—unchanged from July. In August, 32% of owners reported job openings they could not fill, down one point from July; this is the lowest level since July 2020.
The net percentage of owners expecting higher real sales volumes increased by six points to a net 12%. Inventory assessments also shifted: a net zero percent viewed current stocks as too low, up three points from July.
Price increases slowed somewhat; the net percentage of owners raising average selling prices fell by three points to a net 21%, marking the lowest reading this year. Reports of positive profit trends improved by three points to a net negative 19%, which is the best result since March 2023.
Short-term loan rates averaged 8.1% in August, down from July and at their lowest since May 2023. The proportion of owners borrowing regularly fell to 23%, last seen below this level in November 2021.
In terms of hiring difficulties, construction businesses faced particular challenges: nearly half had unfilled positions, though this figure declined compared to previous months and last year’s levels—a sign that job market pressures may be easing for some sectors.
A seasonally adjusted net 15% plan to create new jobs over the next quarter—an increase for the third month running but still historically low. Among those hiring or trying to hire, most found few or no qualified applicants.
Capital outlays remained subdued but saw slight improvement; over half reported such expenditures recently, mainly for equipment and vehicles.
Supply chain disruptions affected just over half of respondents but have become less severe compared to previous months.
Looking ahead, fewer businesses plan price hikes than earlier in the year. Inflation concerns persisted for about one in ten respondents—the same proportion as recent months.
Profitability showed modest gains; among those reporting lower profits, weaker sales were most often cited as the cause. Those seeing higher profits pointed primarily to greater sales volumes.
Concerns about financing costs held steady at four percent listing them as their top problem. Loan accessibility appeared slightly easier than before for some borrowers.
Expectations for better business conditions slipped slightly compared with July figures. Only a small share thought it was a good time to expand operations.
Taxes remained a key concern after labor issues, with government regulations following behind them on business owners’ lists of problems.
The NFIB Research Center has been collecting data on small business economic trends through quarterly surveys since late 1973 and monthly surveys since 1986 using randomly selected members’ responses. The latest survey was conducted during August and results are published monthly on the second Tuesday.
