Small business optimism slips in August as sales, inflation concerns persist

FRANKFORT, Ky. — Small business optimism cooled in August as business owners reported weaker sales and continued concerns about inflation, workforce availability and supply chain disruptions, according to the latest The NFIB Small Business Optimism Index declined to 98.7 in August, down 1.1 points from July but remaining above its 52-year average of 98.0. The organization's Uncertainty Index fell 2 points to 89 but remained well above its historical average of 68. 'Uncertainty remains elevated among small business owners as they face a mixed set of challenges with weakened sales, supply chain disruptions, and inflation pressures,' NFIB Chief Economist Bill Dunkelberg said. 'While expectations for the overall economy dimmed, Main Street owners remain largely positive in the health of their own businesses.' NFIB Kentucky State Director Tom Underwood said the national results reflect many of the challenges facing Kentucky's small businesses. 'Our small business members need certainty, but rising prices, sluggish sales and problems finding enough people to work are making it hard for them to plan ahead and serve their customers' needs,' Underwood said. Expectations for better business conditions declined 5 points in August to a seasonally adjusted net 10%, although the reading remained above the historical average of 4%. Sales were another area of weakness. A seasonally adjusted net negative 9% of owners reported higher nominal sales during the previous three months, a 5-point decline from July and the lowest reading since November 2025. Inflation also remained a significant concern. Sixteen percent of small business owners identified inflation as their single most important problem, up 2 points from July and tying taxes as the second-largest issue facing owners. Labor conditions showed some signs of easing, but finding qualified employees continues to be a challenge. Thirty-five percent of owners reported job openings they could not fill in August, down 1 point from July but 11 points above the historical average. Among the 56% of owners who reported hiring or attempting to hire during August, 82% said they found few or no qualified applicants for available positions. Hiring expectations also declined. A seasonally adjusted net 17% of owners said they plan to create new jobs during the next three months, down 3 points from July, when the measure reached its highest level since October 2022. Supply chain disruptions remain widespread, with 62% of small business owners reporting their operations were affected to some degree in August, down 1 point from July. Despite those pressures, most owners remained positive about their individual businesses. Eleven percent rated the health of their business as excellent and 57% described it as good, while 28% said conditions were fair and 3% rated their business as poor. The NFIB Research Center has tracked small business economic trends quarterly since 1973 and monthly since 1986. The Tags