Great Lakes Wire

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased by 0.5 points in August, reaching 100.8. This figure stands nearly three points above the index’s 52-year average of 98. The rise was driven mainly by an increase in the number of small business owners expecting higher real sales.

Among the ten components measured in the index, four improved, four declined, and two remained unchanged. The Uncertainty Index dropped by four points to 93 but still stayed above its historical average due to reduced uncertainty about financing and planned capital expenditures.

While specific data for Michigan was not available, Amanda Fisher, NFIB Michigan State Director, commented on local conditions: “Small business owners are feeling more optimistic due to improved earnings and stronger sales expectations. The biggest concern for small employers continues to be the tight labor market and finding qualified applicants. However, in Michigan, small businesses are still reeling from damaging policies passed last legislative session.”

Key survey findings showed that 14% of respondents rated their business health as excellent (up one point), while 54% said it was good (up two points). Those rating their business health as fair fell by four points to 27%, with only 4% reporting poor health.

Labor quality remained the top concern for small businesses at 21%. In August, a seasonally adjusted 32% of owners reported job openings they could not fill—a slight decrease from July and the lowest since July 2020. Of those hiring or trying to hire, most continued to report difficulty finding qualified candidates.

Job market challenges were particularly noticeable in construction, manufacturing, and transportation sectors. In construction specifically, nearly half (49%) reported unfilled positions—down six points from July and eleven below last year’s level—indicating some softening in demand for workers.

A net 15% of owners plan to create new jobs over the next three months—a modest improvement but still historically low. Among those hiring or seeking employees in August, 81% found few or no qualified applicants; this included a drop of three percentage points among those reporting few qualified candidates and a two-point drop among those reporting none.

Compensation trends saw a seasonally adjusted net 29% raising pay (up two points), while a net 20% expect to do so in coming months (up three points). Capital outlays rose slightly with more than half (56%) reporting recent investments—mostly on equipment or vehicles.

Inventory assessments improved marginally; a net zero percent considered current stocks too low. Meanwhile, supply chain disruptions affected just over half of respondents but showed signs of easing compared to previous months.

Inflation persisted as a challenge: while price increases slowed—the net percent raising prices dropped three points to its lowest level this year—a third reported higher average prices compared to last month.

Profitability trends also showed improvement; reports of positive profit trends rose three points though remained negative overall at minus nineteen percent on a seasonally adjusted basis. Among those seeing lower profits, weaker sales and rising material costs were most frequently cited causes.

Borrowing activity declined slightly with fewer owners borrowing regularly than at any time since November 2021. Loan rates eased somewhat with an average short-term rate paid at 8.1%, down from July’s figure and marking the lowest since May 2023.

Business expansion plans dipped slightly; only fourteen percent said now is a good time to expand operations—down two points from July.

Taxation concerns held steady as the second most pressing issue after labor quality; seventeen percent cited taxes as their main problem while nine percent pointed to government regulations—a one-point increase from July.

The NFIB Research Center has been collecting economic trend data through regular surveys since the early seventies; this latest survey was conducted among randomly selected members during August 2025.