The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index increased by 0.5 points in August, reaching 100.8. This figure is nearly three points higher than the index’s 52-year average of 98. Of the ten components that make up the index, four saw increases, four declined, and two remained unchanged. The largest contribution to the increase came from more owners expecting real sales to be higher. Meanwhile, the Uncertainty Index fell by four points to 93 but remains above historical norms due to ongoing concerns about financing and capital expenditures.
While national data indicates improvement, NFIB Maryland State Director Mike O’Halloran commented on local conditions: “While optimism among small business owners nationwide is improving, Maryland small business owners are instead managing several new state taxes and fees, deterring their confidence. The tight labor market is also a concern for small employers who are making an effort to hire and create jobs.”
Survey results show that in August, 14% of respondents rated their business health as excellent (up one point), and 54% said it was good (up two points). Twenty-seven percent described it as fair (down four points), while 4% said poor (unchanged).
Labor quality continues to be the top concern for small businesses, with 21% identifying it as their main problem. Thirty-two percent of owners reported having job openings they could not fill during the month—a decrease of one point from July and the lowest level since July 2020.
Expectations for higher real sales volumes improved by six points from July to a net 12%. Inventory concerns eased slightly; a net zero percent of owners viewed current stocks as too low in August.
The proportion of owners raising average selling prices dropped by three points from July to a net 21%, marking the lowest level this year. Reports of positive profit trends rose by three points but remained negative overall at minus nineteen percent—the best reading since March 2023.
The average interest rate paid on short-term loans was down by 0.6 points from July at 8.1%, its lowest since May 2023. Regular borrowing among business owners decreased two points to twenty-three percent—the lowest rate since November 2021.
As noted in NFIB’s monthly jobs report, hiring challenges persist across sectors like construction, manufacturing, and transportation. Forty-nine percent of construction firms had unfilled positions—down six points from July and eleven below last year’s level—suggesting some softening in demand for labor within that industry.
A seasonally adjusted net fifteen percent plan to create new jobs over the next quarter—an increase for the third straight month but still historically low.
Among those seeking workers in August, eighty-one percent said they found few or no qualified applicants. Specifically, twenty-six percent reported few qualified candidates (down three points), while seventeen percent found none (down two).
Plans for compensation increases are rising: a seasonally adjusted net twenty-nine percent raised pay in August (up two points), with another twenty percent planning further increases over the next three months.
Capital investment activity remains subdued; fifty-six percent made outlays in the past six months—one point higher than July—with spending focused mainly on equipment (thirty-seven percent), vehicles (twenty-two), facilities improvements or expansions (seventeen), fixtures or furniture (thirteen), and buildings or land acquisition (five).
Sales figures remain mixed; a net negative nine percent reported higher nominal sales over the previous quarter—unchanged from July.
Inventory levels were largely stable with a net negative six percent reporting gains after seasonal adjustment; ten percent increased stocks while fourteen reduced them unadjusted.
More than half of surveyed businesses continue facing supply chain disruptions though impacts have lessened: fifty-four percent experienced some effect in August—ten percentage points lower than July—with just three percent citing significant impact.
Price expectations softened slightly: seasonally adjusted net twenty-six percent plan price hikes over the next quarter—a decrease of two points from July—and only twenty-one percent actually raised prices during August, setting a new low for this year.
Profit trends improved marginally but remain challenging; thirty-seven percent blamed weaker sales for declining profits while others cited rising material costs or changing product prices. Among those reporting better profits, sixty-five credited stronger sales volumes.
Financing issues held steady: four percent named them as their top challenge; only three percent said recent loans were harder to get than before—a decline from July—and six reported paying higher rates on new loans.
Looking ahead, fewer owners expect better business conditions (-34%), and only fourteen percent believe now is a good time to expand operations—a drop from last month.
Taxes remain an important issue for seventeen percent of respondents; government regulation concerns ticked up one point to nine; competition from larger businesses edged down one point to five.
NFIB has collected these economic trend data through quarterly surveys since late 1973 and monthly since 1986 using random samples drawn from its membership base. The current report covers survey responses gathered in August 2025 and is released every second Tuesday each month.
