U.S. NFIB Small Business Optimism Index (September 2025)

Small Business Optimism retreats in September

• The NFIB's Small Business Optimism Index fell 2 points to 98.8 in September, marking the first decline in three months. As optimism declined, the level of uncertainty rose, with the corresponding index rising 7 points to 100 – the fourth-highest reading in about 50 years. 
• Five out of ten subcomponents fell on the month, two improved, and three remained unchanged. The largest pullbacks were in expectations about an improvement in the economy (-11 points to 23%), current inventory (-7 points to -7%), expected credit conditions (-3 points to -7%) and the belief that now is a good time to expand (-3 points to 11%). 
• Labor market indicators were mixed. The average change in employment per firm was negative for the fourth month in a row. The net share of businesses planning to increase employment rose one point for the fourth month in a row to 16%, while the share of firms with unfilled job openings remained unchanged at 32%. The latter has fallen notably over the last several quarters, though it remains comfortably above its long-term average of 22%.
• Quality of labor concerns fell 3 points, with 18% of business owners identifying this as their top business problem – tied with the share of owners reporting taxes as their top business problem. Meanwhile, the share of firms reporting "few or no qualified workers for job openings" surged 7 points to 50%, completely reversing the decline of the two months prior. 
• Inflation concerns appeared to make a comeback, with 14% of businesses reporting this as their top problem (up 3 points on the month, and the first increase since mid-2024). The share of businesses 'raising' average selling prices rose 3 points to 24%, while the share of firms 'planning’ to raise average selling prices ahead rose 5 points 31% – both measures remain above their historical averages.

Key Implications

• While a weaker showing, September's NFIB reading is basically in line with its historical average, but the subcomponents reveal a nuanced backdrop. In the absence of last month's (BLS) jobs report, today's NFIB report adds credence to the view that there was little progress made on the hiring front in September, with small business job creation stuck in shallow negative territory for several months now. On a more positive note, hiring intentions have trekked consistently higher in recent months. This could work in favor of a moderate turnaround in job creation, but the fact that uncertainty is near record highs is likely to take some wind out of these plans.  
• The Fed has put more of an emphasis on its 'maximum employment' mandate recently as it restarted rate cuts, and while recent labor market data lend support to this narrative, more work also remains to be done on the inflation front. The uptick in the NFIB price metrics and inflation concerns in September speak to difficulties that the Fed will continue to face as it leans toward additional rate cuts, at a time when inflation is still elevated. A recent rekindling to the U.S.-China trade conflict is likely to add to that difficulty.          

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