The NFIB Small Business Optimism Index increased by 1.7 points in July, reaching 100.3, which is slightly above the long-term average of 98 over the past 52 years. The main contributors to this rise were business owners reporting improved business conditions and indicating that it is a good time to expand their operations. However, the Uncertainty Index also rose by eight points from June to 97.
Labor quality remains a significant challenge for small businesses, with 21 percent of owners identifying it as their most important problem, an increase of five points from June.
Greg Moreland, NFIB Pennsylvania State Director, commented on the recent trends: “Optimism among the small business community improved in July following Congress making the Small Business Deduction permanent and providing Pennsylvania’s small businesses with permanent tax relief. While optimism improved, owners are still struggling with hiring and are concerned about costly legislative proposals coming out of Harrisburg.”
Survey results showed that 13 percent of respondents rated their business health as excellent in July (up five points), while 52 percent said it was good (up three points). Those reporting fair or poor health decreased by four and three points respectively.
Poor sales were cited as the top issue by 11 percent of owners—this is the highest level since February 2021. Expectations for better business conditions saw a net increase of 14 points from June to a seasonally adjusted net 36 percent.
Sixteen percent reported that now is a good time to expand their businesses, up five points from June. Inflation concerns remained steady at eleven percent.
Expectations for higher real sales volumes dropped one point from June to a net six percent (seasonally adjusted), which is below the historical average despite being higher than actual sales figures. Plans for capital outlays in the next six months increased by one point to twenty-two percent but remain below the historical average.
Hiring continues to be difficult; thirty-three percent reported job openings they could not fill in July—the lowest since December 2020 but still above average levels. Of those hiring or trying to hire in June, eighty-four percent found few or no qualified applicants. Fourteen percent plan to create new jobs in the next three months.
Labor costs as a primary concern fell one point from June to nine percent. A net twenty-seven percent reported raising compensation (down six points), and seventeen percent plan further increases over the next quarter (down two points).
Capital outlays were reported by fifty-five percent over the last six months—an increase from June’s low—with expenditures mainly on equipment (thirty-eight percent), vehicles (twenty-three percent), facility improvements or expansions (fifteen percent), fixtures and furniture (twelve percent), and buildings or land acquisitions (five percent).
Sales trends remained weak; a net negative nine percent reported higher nominal sales over three months, down four points from June. Inventory gains stayed at a net negative eight percent seasonally adjusted; twelve percent increased stocks while seventeen reduced them.
Price expectations remain high relative to history: twenty-eight percent plan price increases (down four points) and twenty-four report having raised prices recently (down five). Profit trend reports held steady at a net negative twenty-two; lower profits were mostly attributed to weaker sales or rising material costs.
Financing issues affected four percent of respondents—up one point—with borrowing activity at historically low levels and some reporting tighter lending conditions or higher rates compared with previous loans.
Taxes ranked as the second biggest concern for seventeen percent of owners, followed by government regulations at eight percent and competition from large businesses at six.
The NFIB Research Center has collected economic data through quarterly surveys since late 1973 and monthly surveys since 1986 using randomly selected members. The latest survey was conducted in July 2025.
