US small-business optimism hits 11-month high as hiring plans surge

US small-business sentiment climbed to its highest level in 11 months during July, driven by a sharp increase in hiring intentions, according to a survey released on Tuesday. The National Federation of Independent Business (NFIB) reported its Small Business Optimism Index rose 2.4 points to 99.8, surpassing its 52-year average of 98.0.

The rebound in sentiment was fueled by a surge in hiring plans, with the share of owners intending to create new jobs over the next three months jumping 9 points to 20% — the highest level since October 2022. The survey's employment index also recovered, rising 1.9 points to 102.1 after four consecutive monthly declines.

However, these hiring ambitions may face headwinds from persistent worker shortages. The share of owners reporting unfilled job openings increased 4 points to 36%, the highest reading since June 2025, with positions open for both skilled and unskilled labor.

Labor quality and availability remained the single most important problem for small business owners, with 27% identifying it as their main issue — well above the historical average of 12%. Owners across sectors from construction to agriculture reported difficulty finding qualified applicants, with some noting that "finding or having qualified skilled labor applicants is nonexistent."

The labor market tightness comes amid a backdrop of a shrinking workforce, which has decreased by more than a million this year due to retirements and stricter immigration enforcement. The government's recent report of an unexpected decline in July nonfarm payrolls, along with downward revisions to prior months, has been partly attributed to these worker shortages.

Meanwhile, the survey's uncertainty index rose 2 points to 91, with more owners expressing doubt about whether it was a good time to expand. NFIB Chief Economist Bill Dunkelberg linked the uncertainty to the ongoing conflict with Iran, suggesting that "a meaningful resolution will be a major plus for the economy and small business owners."

On a positive note, concerns about inflation eased for the first time this year, with only 14% of businesses citing it as their most important problem — down 7 points from June.