NEW YORK, August 11, 2026, 07:39 EDT
- Optimism among U.S. small businesses increased by 2.4 points, reaching its highest level in 11 months.
- Hiring intentions climbed to their highest point since October 2022.
- Vacant job postings also increased, highlighting a more pronounced labor shortage.
- Worries about inflation lessened, while short-term lending rates increased to 7.9%.
Optimism among U.S. small businesses climbed to its highest level in 11 months in July, as per a National Federation of Independent Business survey published on Tuesday, with hiring and investment plans showing gains.
The headline appears positive for growth. However, 36% of owners were unable to fill vacant positions, marking the highest proportion since June 2025.
The investor outlook is uncertain. Main Street is aiming for growth, yet limited labor availability and higher borrowing costs could hinder progress. Margins for small-caps may come under strain ahead of any pickup in sales.
| NFIB measure | July | June | Forecast or long-run average |
|---|---|---|---|
| Optimism Index | 99.8 | 97.4 | 97.0 forecast; 98.0 average |
| Uncertainty Index | 91 | 89 | 68 average |
| Employment Index | 102.1 | 100.2 | 100.0 average |
Optimism surpassed economists’ forecast of 97.0 and climbed above its 52-year average. Eight out of ten index components posted gains. However, uncertainty continued to register well above typical levels.
Expansion plans provided momentum. A net 20% intend to increase hiring. One in four owners expects to make capital expenditures in the coming six months.
| Growth indicator | July | June | Monthly change |
|---|---|---|---|
| Job creation plans | 20% | 11% | +9 points |
| Capital spending intentions | 25% | 20% | +5 points |
| See it as a good time to expand | 12% | 8% | +4 points |
| Anticipate stronger real sales | 7% | 9% | -2 points |
| Net positive profit trend | -16% | -20% | +4 points |
Hiring intentions were nine points higher than the long-term average. Capital expenditure plans climbed to their strongest level since December 2024. Expectations for real sales, however, declined.
Bill Dunkelberg, Chief Economist at NFIB, struck a cautious note. “Although uncertainty is currently elevated, Main Street anticipates that business conditions will continue to improve.” NFIB
The employment figures challenge that perspective. Of business owners hiring, 85% reported few or no qualified candidates. Openings for skilled positions increased by four points to 31%.
This contributes to the discrepancy seen in Friday’s payroll data. In July, U.S. nonfarm jobs dropped by 23,000. Labor-force participation has decreased by 0.7 percentage points since January.
Some small businesses might hire even if they do not find ideal candidates. This is not the same as a widespread drop in demand.
| Constraint | July | June | Context |
|---|---|---|---|
| Unfilled job positions | 36% | 32% | Peak since June 2025 |
| Labor quality or availability cited as main issue | 27% | 19% | 12% historical norm |
| Inflation named as leading issue | 14% | 21% | Down 7 points |
| Net percentage reporting raised selling prices | 31% | 38% | 14% historical norm |
| Average interest rate on short-term loans | 7.9% | 7.4% | Up 0.5 point |
Several indicators showed reduced price pressure. Inflation ranked as the third biggest concern for owners. However, intentions to raise prices persisted at double their typical rate.
Credit risk remains subdued. Average rates for short-term loans climbed, with overall borrowing also rising. If hiring rebounds funded by more expensive borrowing, the bar for earnings growth will move higher.
| Premarket levels at 05:45 EDT | Movement or indicator |
|---|---|
| Dow futures | -0.09% |
| S&P 500 futures | +0.02% |
| Nasdaq 100 futures | +0.11% |
| September Fed decision | Odds for hike and pause roughly matched |
Index futures remained flat ahead of Tuesday’s main session, as a fresh increase in oil prices steered attention towards inflation and interest rates, overshadowing the NFIB’s unexpected development.
The prior week produced mixed signals. Payroll numbers fell, yet the NFIB’s outlook for hiring quickened. This points to labor market weakness caused by supply constraints.
Risks: Survey intentions may not translate into payroll growth or real investment. A further oil price spike could undo the inflation respite seen in July. Ongoing labor shortages could cause wage increases to outpace productivity gains.
July’s consumer price report is due at 08:30 EDT on Wednesday, with producer price figures set for release Thursday. These reports will show if Main Street’s better outlook holds up against rising borrowing costs.
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