The NFIB Small Business Optimism Index increased by 1.7 points in July, reaching 100.3 and moving above its 52-year average of 98. The improvement was driven mainly by more business owners reporting better conditions and viewing it as a good time to expand operations. However, the Uncertainty Index also rose by eight points from June to reach 97.
Labor quality remained a top concern for small businesses, with 21% of owners identifying it as their main problem, up five points from June. Mike O’Halloran, NFIB Maryland State Director, commented on the findings: “Optimism among small businesses improved in July following Congress making the Small Business Deduction permanent. Unfortunately, Maryland small business owners are also dealing with new state tax and fees plus the ongoing challenges with hiring.”
Survey data showed that in July, there was an uptick in positive business health assessments: 13% rated their business as excellent (up five points), while 52% reported good health (up three points). Reports of fair or poor health declined.
The share of owners citing poor sales as their biggest issue rose to 11%, marking the highest level since February 2021. Expectations for better business conditions increased significantly; a net 36% anticipated improvements (seasonally adjusted), which is above historical norms.
Sixteen percent said it was a good time to expand—five points higher than June—while inflation concerns remained steady at 11%. Expected real sales volumes dipped slightly to a net 6%, remaining below long-term averages.
Plans for capital spending saw modest growth; 22% intended outlays over the next six months, still trailing the historical average of 29%. Hiring difficulties persisted: one-third reported job openings they could not fill—the lowest rate since December 2020 but still above normal levels. Among those hiring or trying to hire in June, most cited few or no qualified applicants. Fourteen percent planned new jobs soon.
Reports of labor costs as a primary issue fell one point to nine percent. Fewer businesses reported raising compensation compared to June; both current and planned increases were down slightly.
More than half made capital expenditures recently, mostly on equipment (38%), vehicles (23%), facility improvements (15%), fixtures/furniture (12%), or property/land acquisition (5%).
Sales performance softened; a net negative nine percent reported higher nominal sales over three months compared to June’s results. Inventory gains stayed unchanged at a net negative eight percent seasonally adjusted.
Price plans reflected ongoing inflationary pressures despite some easing: A net twenty-eight percent planned price hikes while twenty-four percent had already raised prices recently.
Profit trends were largely unchanged at a net negative twenty-two percent. Lower profits were often attributed to weaker sales or rising material/labor costs; higher profits came mainly from increased sales volume or seasonal factors.
Financing issues remained limited: only four percent listed financing and interest rates as their top problem—a slight increase from June—with regular borrowing also historically low at twenty-five percent.
Taxes ranked second among owner concerns at seventeen percent, followed by government regulations/red tape and competition from large firms.
The survey data comes from monthly polling conducted by the NFIB Research Center since the mid-1980s using randomly selected members and is released every second Tuesday.
