Small business owners are showing increased optimism about future business conditions, according to findings shared by Holly Wade, Executive Director of the NFIB Research Center. In a recent interview with Ashley Mastronardi on NYSE TV, Wade discussed the results from NFIB’s July Small Business Economic Trends (SBET) survey and commented on the state of the small business economy.
Wade said that expectations for better business conditions have improved, citing changes in policy as a key factor. “The small business owners that we surveyed in July were a bit more optimistic than they have been. We saw a decent increase in our Index, largely related to a shift in small business owners expecting business conditions to improve over the next six months. [We had seen] a bit of a decline in that question within the Index, but that improved substantially in July…one of the big drivers was the [inclusion of the Small Business Deduction in the passage of the One Big Beautiful Bill Act], and their ability to now focus on operating their business and dealing with some of the price increases and not having to anticipate a tax increase at the end of the year.”
She noted ongoing uncertainty among many owners regarding expansion plans. “On the uncertainty front…there was a large shift in those who previously said it was a bad time to expand moving to ‘Uncertain/I’m not really sure,’ who are sort of sitting around waiting to see how things develop. So, that was the major shift on the Uncertainty Index. It’s been elevated for a number of years but we did see quite a jump in the July data.”
Labor quality and labor costs continue to be significant challenges for nearly one-third of respondents. “We’ve seen just shy of a third of our members say that either labor quality or the cost of labor are their biggest issues in operating their business. And that’s been a pervasive issue since around 2016-2018 – where we really saw a ramp up in business owners having issues related to retaining qualified workers, finding qualified applicants, and then, more recently, the increase in…cost pressures [cause by] competing on the compensation level. This has increased in severity, but it’s a problem that we’ve seen across the board for a number of years now.”
Concerns about inflation appear less severe compared to previous years. “Eleven percent this past month said that inflation is their biggest problem, and that’s a huge decline from the average over the last number of years, which has been hovering around 23%…And also we’re below the average on those that plan to increase their prices and those who actually increased prices. So, that part of business operations has eased up quite a bit and that’s been a huge relief for a lot of small business owners.”
