The National Federation of Independent Business Small Business Optimism Index rose 2.4 points to 99.8 in July, its highest level since August 2025 and above its 52-year average of 98, according to survey results NFIB released on Aug. 11. Eight of the index’s 10 components increased, led by a sharp jump in hiring intentions: a seasonally adjusted net 20% of owners said they planned to create jobs over the next three months, up 9 points from June and the highest reading since October 2022. A net 25% of owners also said they planned capital outlays over the next six months, up 5 points from June and the highest level since December 2024, according to the survey.

The improvement matters because the index has spent much of 2026 below its historical average, and July marks the first time since February that the reading has cleared that benchmark, according to Haver Analytics’ summary of the survey. For small employers, the shift in hiring and investment plans is a signal of intent rather than confirmed activity – the same report shows 36% of owners with job openings they could not fill, up 4 points and the highest share since June 2025, and labor quality or availability remained the single most commonly cited business problem, named by 27% of respondents.

What the Latest Optimism Index Shows About Owner Sentiment

The headline index number aggregates 10 separate components, and July’s data show the improvement was broad but not uniform. The reading follows a stretch of below-average readings this year, a pattern detailed in previous NFIB survey coverage, and eight components rose while two fell, with the steepest gains concentrated in hiring and capital-expenditure plans rather than in sales or earnings expectations.

Expectations for the economy over the next six months improved 2 points to a net 15%, the highest reading since February, according to Haver Analytics’ breakdown of the underlying data. Plans to expand the business rose 4 points to 12%, a five-month high, while the frequency of positive profit-trend reports improved 4 points to a net negative 16% – still in negative territory, a position the measure has held continuously since December 2019.

Two components moved the other direction. Real sales expectations fell 2 points to a net 7%, down from a five-month high in June, and reports of inventory levels as “too low” declined by 2 points as well, per NFIB. Actual and planned price increases also retreated: the net share of owners raising average selling prices fell 7 points to 31%, the first month-over-month decline since February, and the share planning further price increases eased 4 points to 28%.

Inflation’s grip on owner sentiment loosened somewhat too – 14% of owners cited it as their top business problem, down 7 points from June’s reading, which had been the highest since October 2024, marking the first decline in that measure this year. Even so, the NFIB Uncertainty Index climbed 2 points to 91, remaining well above its historical average of 68, driven largely by owners’ uncertainty about whether it is a good time to expand and about capital-expenditure plans specifically.

Hiring Plans Are Improving, but Labor Constraints Have Not Disappeared

The jump in hiring intentions was the single largest contributor to July’s index gain, and it arrived alongside a separate signal that actual employment had started moving again. The NFIB Small Business Employment Index rose to 102.1 in July, according to NFIB’s monthly Jobs Report, after four consecutive months of decline – a reversal that lends some support to the survey’s forward-looking hiring plans.

But the same report shows small employers are hiring against a tighter labor pool than a year ago. Thirty-six percent of owners reported job openings they could not fill in July, up 4 points from June and the highest share since June 2025, and separately, 51% of respondents said qualified workers were hard to find, matching the highest level since September 2024, according to Haver Analytics’ breakdown of the survey. Labor quality or availability was cited as the single most important business problem by 27% of owners, up 8 points from June and 15 points above its long-run average of 12%.

Wage pressure has not eased in step with hiring optimism. A net 31% of owners said they raised compensation over the past three months, up from 28% in June, and 19% planned to raise compensation over the next three months, the highest share since February, according to Haver Analytics. For small employers, that combination of rising pay and unfilled positions carries different weight than it does for larger companies: bigger employers can often absorb recruiting delays with internal transfers, contractor staffing, or automation spending that a 10-person firm – the profile of the median NFIB respondent – typically cannot deploy on short notice. That asymmetry is one reason hiring intentions captured in the optimism index and completed payroll growth reported elsewhere, such as in Insperity’s first-quarter results showing softer worksite employee counts, can diverge even when both track the same broad labor market.

Investment Plans Are Recovering Unevenly as Owners Protect Cash

Capital spending plans posted one of the larger gains in July’s report. A seasonally adjusted 25% of owners said they planned to make capital outlays in the next six months, up 5 points from June and the highest reading since December 2024, according to NFIB. TD Economics’ analysis of the release noted that the increase was part of a cluster of components – capital-expenditure plans, reports that now is a good time to expand, and earnings trends – that each improved by 4 to 5 points during the month.

Those plans remain conditional rather than confirmed, and the data suggest owners are still weighing whether to convert intent into spending. Expected credit conditions improved only marginally, edging up to a net negative 4% in July from negative 5% in June, meaning more owners than not still expect financing to become somewhat less available or more expensive in the coming months. The Uncertainty Index’s climb to 91 was driven in part by owners’ uncertainty over capital-expenditure plans specifically, which indicates that even as more owners check the box for planned investment, confidence in following through has not caught up.

Profit trends remain a constraint as well. The frequency of positive profit reports improved 4 points but stayed at a net negative 16%, a level NFIB has recorded continuously since December 2019. For small firms without the balance-sheet depth of larger competitors, converting a capital-spending plan into an actual equipment purchase or technology upgrade typically depends on whether margins hold up long enough to justify the outlay – a dependency this survey’s forward-looking questions cannot resolve on their own.

Regional Conditions Complicate the National Optimism Reading

Both Business Journal Daily and ColoradoBiz republished NFIB’s national release largely intact, which is itself a useful reminder of what the Small Business Optimism Index does and does not measure. The index is built from a single national survey of NFIB’s membership, drawing anywhere from 500 to 2,000 respondents a month, and it reports one composite figure rather than a state-by-state or metro-by-metro breakdown, according to Haver Analytics’ description of the survey’s construction.

That matters for how far the July reading can be generalized. A 27% share of owners citing labor quality as their top concern nationally can mask sharply different conditions between a metro area with a tight healthcare or construction labor pool and a region with slower population growth and more available workers. Similarly, a national net 25% planning capital outlays does not indicate whether that spending intention is concentrated in regions with stronger consumer demand or in states facing higher commercial financing costs; NFIB’s release does not break out those differences.

The practical takeaway for owners reading regional coverage of a national survey is that the index functions as a leading indicator of aggregate sentiment, not a forecast for any specific local market. A small manufacturer weighing a capital purchase should treat the national uptick in capex plans as one input among several – alongside local order backlogs, regional credit conditions, and sector-specific demand – rather than as direct evidence that conditions have improved in their own market. Broader small-business planning data points to similar variation beneath aggregate national figures. The distinction is not a criticism of the survey’s methodology so much as a limit on what a single national index, however widely followed, can tell an individual operator about their own market.

The Survey Signals Better Intentions, Not Yet a Broad-Based Expansion

NFIB’s chief economist framed the July results in similarly bounded terms.

“Small business optimism rose again in July, with a significant increase in owners expecting to hire, accompanied by an improvement in plans to make capital expenditures. Although uncertainty is currently elevated, Main Street anticipates that business conditions will continue to improve.”

– Bill Dunkelberg, Chief Economist, NFIB

That statement, paired with the data, describes a shift in expectations rather than a confirmed expansion. TD Economics cautioned in its analysis that, given the volatile nature of these subcomponents, the continued elevation in the Uncertainty Index, and the fact that economic expectations remain below levels recorded before this year’s geopolitical shocks, the July report warrants cautious optimism even though it beat consensus forecasts of a roughly flat 97.5 reading. The firm also noted that small businesses account for a little under half of all private-sector payrolls, meaning a durable improvement in hiring plans would carry meaningful macro weight if it holds – but one month of data does not establish that durability.

The survey’s structure adds its own limits. NFIB is both the data collector and an advocacy organization for small-business interests, and its sample consists of its own dues-paying membership rather than a random cross-section of the roughly 33 million small businesses the Small Business Administration estimates operate in the U.S., employing 62 million workers, according to Haver Analytics’ citation of SBA figures. The typical NFIB respondent employs about 10 people and reports roughly $500,000 in annual gross sales, a profile that skews toward established employer firms rather than the full population of non-employer sole proprietors and very early-stage businesses. None of that invalidates the July reading, but it does mean the index measures sentiment among a specific, established segment of small-business owners rather than the entire range of enterprises the SBA counts as small.

Indicators to Watch

Several data points will determine whether July’s improvement extends into a sustained trend or proves to be a one-month rebound, as flagged by both NFIB’s own release and outside analysts covering it.

  • August NFIB Small Business Optimism Index – NFIB’s next release will show whether hiring and capex plans held near July’s levels or reverted toward the sub-98 readings the index has posted in prior months this year, testing whether July marks a turning point or an outlier.
  • NFIB Small Business Employment Index – After four straight months of decline before July’s rebound to 102.1, a second consecutive increase would strengthen the case that hiring plans are translating into actual headcount growth rather than remaining intentions.
  • Federal Reserve rate decisions – TD Economics noted that markets were pricing roughly even odds of a rate move at the Fed’s September meeting; a change in financing costs would directly affect the credit conditions owners cited as a lingering source of uncertainty around capital spending.
  • Compensation trends – A net 19% of owners planned to raise worker pay over the next three months, the highest share since February; continued wage growth alongside unfilled openings would indicate labor costs are absorbing gains that might otherwise fund expansion.
  • Selling-price plans – The share of owners planning to raise prices eased to 28% in July from 32% in June; a further decline would support the case that inflationary pressure on small-business pricing is genuinely moderating rather than pausing.
  • Regional and sector-level employment data – Because the national index does not break out state or metro conditions, upcoming labor-market releases will show whether the hiring optimism NFIB recorded nationally is showing up broadly or is concentrated in specific industries and geographies.

July’s NFIB report describes an improvement in what small-business owners intend to do, not a confirmed increase in what they have done. Hiring plans, capital-spending plans, and expectations for the economy all moved up together for the first time in several months, while the number of unfilled positions, labor-quality complaints, and the Uncertainty Index all rose in the same report. Whether the coming months bring the hiring and investment owners say they plan, or another retreat toward the softer readings recorded earlier this year, depends on cost and demand pressures that this survey can describe but cannot resolve.