The NFIB’s Small Business Optimism Index fell 0.8 points to 97.9 in September, lagging consensus expectations for a more gradual decline to 98.2.
Six out of the ten index subcomponents improved during the month, three deteriorated, and one remained unchanged. The largest decline came from the net share of firms expecting the economy to improve (down 4 points to 6%). The net share of firms reporting that now is a good time to expand fell 5 points to 7%, while share of firms reporting higher earnings and those planning to increase capital expenditures both fell modestly. However, the share of firms expecting higher real sales rose 3 points to 9%, with plans to increase inventories also rising marginally.
The net share of businesses planning to increase employment was unchanged in September at 17%, but the share reporting unfilled job vacancies fell by 3 points to 32%. Quality of labor concerns remained the most cited concern of businesses, with 26% of business owners identifying this as their top business problem.
The net share of firms currently increasing employee compensation fell 3 points to 28%, while the net share planning to do so over the next three months increased 2 points to 20%. The share of businesses ‘raising’ average selling prices was unchanged at 31%, while the share of those ‘planning’ to raise average selling prices increased 3 points to 31%.
Key Implications
Small business confidence broadly deteriorated in September as most firms surveyed reported slower earnings trends and softer expectations for the economy moving forward. The silver lining of the report was that expectations for real sales over the next six months improved, although they remain below the 2025 average. With the NFIB uncertainty index remaining structurally elevated, it’s clear that small businesses continue to operate in a challenging environment.
Renewed inflation pressures are one element of this, with the share of small businesses reporting it as their top concern near the peak hit earlier this year. Selling prices have faced upward pressure as a result, with the average share of businesses raising prices in 2026 at the highest level since 2023. Tomorrow’s inflation report will provide a more comprehensive view of prices in the economy, but markets currently expect the Federal Reserve to tighten monetary policy further over the coming months.
