Small Business Sentiment Slips in August — Evening Brief – 09.08.26
Small-business optimism eased in August from its highest level in a year, as owners reported weaker sales and renewed concern about inflation even though they remained generally positive about the health of their own companies.
The National Federation of Independent Business Small Business Optimism Index fell 1.1 points to 98.7 in August, after reaching 99.8 in July, its highest reading since August 2025. The index remained above its 52-year average of 98.0. The NFIB Uncertainty Index declined two points to 89 but stayed 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.”
Expectations for improved business conditions over the next six months fell 5 points to a net 10%, seasonally adjusted. The reading nevertheless remained above the long-run average of a net 4%. Owners’ assessment of their current companies was more favorable: 11% described their businesses as excellent, 57% as good, 28% as fair and 3% as poor.
Sales were a notable point of weakness. A seasonally adjusted net negative 9% of owners reported higher nominal sales during the prior three months, down five points from July and the weakest reading since November 2025. That deterioration helps explain why general optimism slipped despite an overall reading above its historical norm.
Inflation rose two points as owners’ single most important problem, to 16%, tying taxes as the second-largest concern. Labor-quality or availability concerns and labor-cost concerns both eased, with the latter reaching its lowest level since March 2021. Labor availability, however, remained well above its long-run average as a persistent challenge.
Credit conditions showed modest improvement: the net share expecting easier credit conditions rose two points to -2%, the highest reading since December 2024. Yet 62% of owners said supply-chain disruptions affected their business to some degree, only one point below July.