The Small Business Optimism Index released by the National Federation of Independent Business (NFIB) fell 1.1 points in August to 98.7, below expectations of 99.3. Six of the index’s 10 components declined, led by a 5-point drop in the share of owners expecting better business conditions. Actual sales also weakened, with a net negative 9% of owners reporting higher sales over the past three months, the lowest reading since November 2025. Meanwhile, the NFIB Uncertainty Index fell 2 points to 89, though it remained well above its historical average of 68.
The ABA Office of the Chief Economist believes that small-business owners remain cautiously optimistic amid a mixed operating environment. While broader economic activity remains resilient, weaker reported sales and elevated input costs suggest that price-sensitive consumers and persistent cost pressures are weighing more heavily on smaller firms. Against this backdrop, businesses may remain selective in their hiring and investment decisions, particularly as uncertainty surrounding inflation, tariffs, energy prices and geopolitical developments remain elevated. This could lead to tepid loan demand for small businesses in the coming months.
