Hawkeye Reporter

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased by 0.5 points in August, reaching 100.8, which is nearly three points above its long-term average. The report shows that out of the ten components measured in the index, four saw increases, four decreased, and two remained unchanged. The most significant contributor to the rise was an increase in owners expecting higher real sales.

The Uncertainty Index dropped by four points to 93 but stayed above its historical average due to less uncertainty about financing and planned capital expenditures.

“Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings,” said NFIB Chief Economist Bill Dunkelberg. “While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street.”

Matt Everson, NFIB Iowa State Director, commented on the results: “The national rise in small business optimism is mirrored on Iowa’s Main Street. Our state’s strong business climate, combined with the recently passed small business tax relief, is giving local owners confidence in their ability to expand and invest in the future.”

Key findings from the August survey indicate improvements in business health ratings among small businesses. Fourteen percent rated their business as excellent and 54% as good. Twenty-seven percent reported fair health for their businesses while 4% rated it poor.

Labor quality continued to be a concern for many owners; 21% identified it as their single most important problem. In August, 32% of all owners reported job openings they could not fill—down one point from July—with similar trends reflected in NFIB’s monthly jobs report. This level of unfilled job openings has not been seen since July 2020.

There were sector-specific differences: almost half of construction firms had trouble filling positions, though this figure fell six points from July and was eleven points lower than last year’s number—indicating a possible softening of demand for workers within that industry.

A net 12% of owners expect higher real sales volumes over coming months—a six-point increase from July—and a net zero percent viewed current inventory stocks as too low. Owners raising average selling prices dropped three points to a net 21%, marking this year’s lowest reading so far.

Profit trend reports also showed improvement; there was a three-point gain to a net negative 19%, which is the best result since March 2023. The average rate paid on short maturity loans declined by 0.6 percentage points to 8.1%, its lowest since May 2023.

Borrowing activity among small businesses also decreased: only 23% reported borrowing regularly—the lowest since November 2021.

Plans for job creation are modest but positive; a seasonally adjusted net 15% plan new hires over the next three months—up one point from July but still historically low levels.

Among those hiring or trying to hire during August, most struggled with applicant qualifications: twenty-six percent found few qualified applicants (down three points), while seventeen percent found none (down two points).

Capital spending remained subdued but steady; fifty-six percent made outlays over the past six months—one point higher than July—with investments primarily going toward equipment purchases or facility improvements.

Supply chain disruptions affected just over half of respondents but at reduced levels compared to previous months: only three percent reported significant impact while forty-four percent said there was no impact at all—an eight-point increase from July.

Looking ahead, fewer owners plan price increases compared to previous months; a seasonally adjusted net twenty-six percent intend price hikes—a decrease of two points from July.

Taxation remains a notable concern for small businesses: seventeen percent named taxes as their main problem—the second highest after labor quality—while government regulations were cited by nine percent and competition from large companies by five percent.

The NFIB Research Center has been collecting data on small business economic trends through quarterly surveys since late 1973 and monthly surveys since 1986. Survey participants are randomly selected from NFIB membership, with reports released monthly based on recent data collection—in this case conducted during August 2025.