The NFIB Small Business Optimism Index rose by three points in May to 98.8, slightly surpassing the 51-year average of 98. This increase was largely driven by expected business conditions and sales expectations. However, the Uncertainty Index also climbed two points from April to 94. Taxes emerged as the top concern for small business owners, with 18% identifying it as their primary issue, a rise of two points from April.
“Although optimism recovered slightly in May, uncertainty is still high among small business owners,” stated NFIB Chief Economist Bill Dunkelberg. “While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth.”
Greg Moreland, NFIB State Director, noted that while there is increased optimism as businesses prepare for summer, challenges remain in Pennsylvania. He urged lawmakers to focus on policies that support small businesses: “Small business optimism has increased as owners prepare for the summer months, but Pennsylvania’s Main Streets are not out of the woods yet. The General Assembly must avoid policies that will make it even harder for employers to hire and create jobs in the Commonwealth. We urge lawmakers in Harrisburg and Washington, D.C., to prioritize solutions that will bolster our small businesses, such as making the Small Business Deduction permanent.”
Key findings from the survey include a net 1% of owners viewing current inventory stocks as “too low,” marking a significant seven-point increase from April and reaching its highest level since August 2022. Additionally, a net 25% expect better business conditions and a net 10% anticipate higher real sales volumes.
Capital outlays are planned by 22% of respondents over the next six months, which is up four points from April and represents this year’s highest reading. Labor quality concerns decreased slightly to 16%, while inflation remained unchanged at 14%.
In terms of employment challenges, 34% reported job openings they could not fill in May—unchanged from April—and a net 12% plan to create new jobs within three months.
Reports indicate labor costs rose one point to become a significant issue for 9% of business owners. Compensation increases were reported by a net 26%, down seven points from April.
Sales trends showed no change in poor sales being identified as a top problem by 9%. Inventory gains remained steady at a net negative 5%, seasonally adjusted.
Pricing strategies revealed that a net 31% plan price hikes in May—a three-point rise from April—with selling prices remaining consistent at a net 25%.
Profit trends were less favorable with reports showing weaker performance compared to April; contributing factors included weaker sales and rising material costs.
Interest rates were cited as an increasing concern by some owners with financing issues rising slightly.
Overall expansion plans showed minor improvement with ten percent considering it a good time to expand operations.
The NFIB Research Center has been collecting data through quarterly surveys since late-1973 and monthly surveys since mid-1986. This latest survey was conducted during May 2025.
NFIB continues its longstanding advocacy role on behalf of small businesses across America through nonpartisan efforts focused on supporting independent enterprises.
