The NFIB Small Business Optimism Index rose 2.4 points in July to 99.8, rising above its 52-year average of 98.0. This marks the highest level since August 2025. Of the 10 Optimism Index components, eight increased, and two decreased. Hiring plans improved substantially and contributed most to the rise in the Index. Real sales expectations and reports of inventory levels as “too low” both fell by 2 points. The Uncertainty Index rose 2 points from June to 91, remaining well above its historical average of 68. The rise was driven by an increase in owners reporting uncertainty about whether it is a good time to expand and capital expenditure plans.
As reported in NFIB’s monthly Jobs Report, the NFIB Small Business Employment Index rose after four consecutive months of decline, registering 102.1 in July. A seasonally adjusted 36% of small business owners reported job openings they could not fill, up 4 points from June and the highest reading since June 2025.
“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,” said NFIB Chief Economist Bill Dunkelberg. “Although uncertainty is currently elevated, Main Street anticipates that business conditions will continue to improve.”
“Arizona small business owners are ready to hire, but they need the confidence to expand,” NFIB State Director Chad Heinrich said. “The Legislature deserves credit for aligning our state tax code with the federal business expensing provisions, giving Arizona businesses real incentive to turn that hiring momentum into new investment in jobs and equipment.”
Key findings include:
- In July, the top reported issue was labor quality or availability. Twenty-seven percent of small business owners cited “labor quality or availability” as their single most important problem in July, up 8 points from June and 15 points above the historical average of 12%.
- Thirty-six percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up 4 points from June and the highest reading since June 2025.
- Looking ahead, a seasonally adjusted net 20% of owners plan to create new jobs over the next three months, up 9 points from June. Hiring plans are at their highest level since October 2022 and are 9 points above the historical average.
- In July, both actual and planned price increases dropped notably from June. The net percent of owners raising average selling prices fell 7 points from June to a net 31% (seasonally adjusted), after four consecutive months of increases. Looking forward to the next three months, a net 28% (seasonally adjusted) plan to increase prices, down 4 points from June.
- Reports of inflation as the single most important problem fell for the first time this year. Fourteen percent of business owners cited inflation as their single most important business problem, down 7 points from June’s highest reading since October 2024.
- Twenty-five percent (seasonally adjusted) of small business owners plan to make capital outlays in the next six months, up 5 points from June and the highest reading since December 2024.
- The net percent of owners expecting higher real sales volumes over the next quarter fell 2 points from June to a net 7% (seasonally adjusted).
- The frequency of reports of positive profit trends improved 4 points from June to a net negative 16% (seasonally adjusted).
