Sunflower State News

The National Federation of Independent Business (NFIB) reported a modest increase in small business optimism for August 2025. According to the NFIB Small Business Optimism Index, confidence among small business owners rose by 0.5 points to reach 100.8, which is nearly three points above the index's 52-year average of 98.

Of the ten components measured by the index, four increased, four decreased, and two were unchanged. The most significant factor contributing to the rise was an increase in owners expecting higher real sales.

“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.”

“Small business owners are generally feeling better about the health of the economy,” NFIB State Director Dan Murray said. “Stronger sales and earnings, along with the tax relief delivered by Congress, have all played a role in boosting Main Street confidence, despite lingering labor challenges.”

The survey showed that 14% of respondents rated their business health as excellent and 54% as good—both figures up from July. Only 4% reported poor business health, which was unchanged from the previous month.

Labor quality continues to be a primary concern for small businesses; 21% of respondents cited it as their top problem. Job openings that could not be filled fell slightly: 32% of owners reported such openings in August, down one point from July—the lowest level since July 2020.

Industries like construction are particularly affected by hiring difficulties. In construction specifically, nearly half (49%) of businesses had job openings they could not fill—a decrease from both July and last year—indicating some softening in that sector’s job market.

Hiring plans remain cautious but positive: a seasonally adjusted net 15% of owners plan to create new jobs within three months. Among those trying to hire in August, most reported difficulty finding qualified applicants.

Reports show that capital spending remains subdued but steady; just over half (56%) of small businesses made capital outlays during the past six months. Equipment purchases led these expenditures.

Sales performance has seen limited gains: a net negative 9% reported higher nominal sales over the last three months—unchanged from July—but there was some improvement in profit trends.

Supply chain disruptions are still impacting more than half (54%) of businesses surveyed, though this is down from previous months.

Inflation concerns persist but remain stable; eleven percent listed inflation as their most pressing issue for a third consecutive month.

On financing matters, only four percent saw interest rates as their main challenge while regular borrowing dropped slightly among respondents. The average rate paid on short maturity loans fell to its lowest since May 2023 at 8.1%.

Taxation and government regulation also continue to weigh on small businesses; taxes were named as the second most important problem by seventeen percent of respondents while nine percent cited regulations and red tape.

The data was collected via NFIB’s monthly survey conducted among randomly selected members during August 2025.