Great Lakes Wire

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased by 1.7 points in July, reaching 100.3 and surpassing its long-term average. The rise was mainly due to improved perceptions of business conditions and more owners seeing it as a good time to expand. However, the Uncertainty Index also climbed by eight points to 97, reflecting ongoing concerns among business owners.

Labor quality remains a significant challenge, with 21% of small business owners identifying it as their top issue—an increase from June and now the most frequently cited problem.

While there is no state-specific data available for Michigan, Amanda Fisher, NFIB Michigan State Director, commented on the results: “Optimism among the small business community improved in July following Congress making the Small Business Deduction permanent and providing lasting tax relief for Michigan’s small businesses. Despite the improvement, hiring remains a significant challenge for Main Street as owners report struggles finding qualified workers.”

Survey findings showed that 13% of respondents rated their business health as excellent and 52% as good, both showing improvement over June. The percentage reporting fair or poor health declined to 31% and 4%, respectively.

Sales remain a concern for some, with the proportion citing poor sales as their main problem rising to 11%, the highest level since early 2021. Expectations for better business conditions also improved, with a net 36% expecting improvement—a notable increase from June.

In terms of expansion plans, 16% reported it is a good time to expand their businesses. Inflation continues to be an issue for some; 11% said it was their single most important problem.

The share of owners expecting higher real sales volumes decreased slightly to a net 6%. Plans for capital spending rose modestly but remained below historical averages.

According to NFIB’s monthly jobs report, job openings that could not be filled dropped three points to a seasonally adjusted 33%, still above average levels. Most employers seeking new hires continue to struggle with finding qualified candidates. A net 14% plan new job creation in the next three months.

Fewer business owners identified labor costs as their main issue this month compared to last month. Compensation increases are slowing: net percentages planning or reporting wage hikes fell from June levels.

Capital expenditures saw an uptick; over half of surveyed owners reported outlays in recent months, mostly directed at equipment and vehicles.

Nominal sales reports weakened slightly while inventory levels remained negative overall. More owners plan price increases than decreases, signaling continued inflationary pressures despite some easing from previous months.

Profit trends have not shifted much: more owners still report negative profit trends than positive ones, largely attributing lower profits to weak sales and rising costs.

Concerns about financing are relatively stable with only minor fluctuations in borrowing activity or loan difficulty reported by respondents.

Taxes remain a leading concern after labor quality but have eased somewhat since June. Fewer owners pointed to government regulations or competition from large businesses as primary problems compared to previous surveys.

The NFIB Research Center has collected this data since the early 1970s through quarterly and then monthly surveys among randomly selected members. The latest survey reflects responses collected during July 2025.