Small business confidence hit its highest level since February in July, as reported by Jennifer Nash of Advisor Perspectives, with the NFIB Small Business Optimism Index rising 1.7 points to 100.3—exceeding expectations as more owners anticipate better business conditions and expansion opportunities, even as labor shortages and sales challenges persist.
The boost in optimism was fueled by a jump in economic expectations and more owners believing it’s a good time to expand. However, the survey also revealed persistent concerns that could test resilience in the months ahead.
Labor quality remained the top problem reported by small business owners. The share of owners citing poor sales as their biggest challenge reached its highest point since February 2021, while those pointing to inflation as their main concern stayed at their lowest level since September 2021.
Owners’ self-assessed business health reflected a mostly positive view: Excellent (13%), Good (52%), Fair (31%), Poor (4%).
July’s index components showed six gains, two declines, and two unchanged readings. Notably, expectations for the economy to improve jumped 14 points, while “now a good time to expand” rose 5 points. Real sales expectations dipped slightly, and current job openings fell by 3 points.
Historically, the NFIB index has tracked closely with consumer sentiment measures from the Conference Board and the University of Michigan. Both business and consumer moods tend to rise and fall together, though small business sentiment acted as a leading indicator for the first two recessions of the century—unlike during the COVID-19 downturn.
While optimism is up, the underlying issues of labor shortages and sales challenges suggest that small businesses will need to remain nimble, balancing expansion plans with strategies to address hiring needs and customer demand.