Small Business Optimism Inched Down to 98.6 in June

Washington, DC, July 8, 2025-The NFIB Small Business Optimism Index remained steady in June, edging down 0.2 of a point to 98.6, slightly above the 51-year average of 98. 

A substantial increase in respondents reporting excess inventories contributed the most to the decline in the index. The Uncertainty Index decreased by five points from May to 89. Nineteen percent of small business owners reported taxes as their single most important problem, up one point from May and ranking as the top problem again. The last time taxes reached 19% was in July 2021. 

“Small business optimism remained steady in June while uncertainty fell,” said NFIB chief economist Bill Dunkelberg. “Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs.” 

Key findings include: 

• A net negative 5% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in June, down six points from May. This signals a net increase in inventories, with 7% reporting inventories “too low” in June compared to 8% in May. Twelve percent reported current inventories “too high” in June compared to 7% in May. This component contributed the most to the Optimism Index’s decline. 
• The net percent of owners expecting better business conditions fell three points from May to a net 22% (seasonally adjusted). Historically, this is still a positive reading with the 51-year average at a net 3%. 
• The net percent of owners expecting higher real sales volumes fell three points from May to a net 7% (seasonally adjusted). 
• Twenty-one percent (seasonally adjusted) plan capital outlays in the next six months, down one point from May. 
• The percent of small business owners reporting labor quality as the single most important problem for business remained at 16%, unchanged from May. The last time complaints about labor quality fell below 16% was in April 2020. Fewer small business owners reporting labor as their top problem aligns with other data suggesting a more tempered labor market economy-wide. 
• Eleven percent of owners reported that inflation was their single most important problem in operating their business (higher input costs), down three points from May and the lowest reading since September 2021. Inflation pressures continue to ease on Main Street.  
• The data on overall health of respondents’ business showed substantial deterioration, with declines in the percentages reporting their business was in excellent or good health. When asked to rate the overall health of their business, 8% reported excellent (down six points), and 49% reported good (down six points). Thirty-five percent reported the health of their business was fair (up seven points), and 7% reported poor (up three points).