The Sconi

The NFIB Small Business Optimism Index rose by 0.5 points in August, reaching 100.8, which is nearly three points above its long-term average. The index is based on ten components, of which four increased, four decreased, and two were unchanged during the month. A key factor behind the rise was an increase in owners expecting higher real sales.

The Uncertainty Index dropped by four points to 93 but remains above historical norms. This decrease was mainly due to reduced uncertainty around financing expectations and planned capital expenditures.

“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.”

Luke Bacher, NFIB Wisconsin State Director, commented on the results for Wisconsin: “Wisconsin’s small business community is a significant driver of the state’s economy. With improved sales expectations and an increased desire for capital outlays, we’re seeing our manufacturers and service-based businesses ready to invest and expand. However, labor quality remains a persistent challenge, a problem we share with the rest of the nation.”

In August, 14% of surveyed small business owners rated their business health as excellent and 54% as good. Those reporting fair conditions fell to 27%, while those indicating poor conditions remained at 4%. Labor quality continued as the most cited problem for businesses at 21%.

A seasonally adjusted 32% of all owners reported job openings they could not fill in August—down one point from July—marking the lowest level since July 2020. Among these openings, skilled worker positions accounted for 28% (down one point), while unskilled labor openings rose to 13%.

Job market difficulties are especially notable in construction, manufacturing, and transportation sectors. In construction specifically, almost half of businesses reported unfilled positions—a figure that has declined from previous months.

Looking ahead, a net 15% of owners plan to create new jobs over the next three months—up one point from July but still historically low. Of those hiring or trying to hire in August (53%), most (81%) found few or no qualified applicants.

Labor costs as a primary concern dropped slightly to 8%. Compensation plans are rising: a net 29% reported raising compensation (up two points), and a net 20% plan increases over the next quarter.

Capital spending activity showed slight improvement; over half (56%) made outlays in the last six months. Most investments went toward equipment (37%), vehicles (22%), facility improvements or expansions (17%), fixtures/furniture (13%), or land/buildings (5%).

Sales trends showed mixed results: a net negative nine percent reported higher nominal sales over three months—the same as July—while inventory gains also saw minor changes.

Supply chain disruptions affected just over half of respondents but have lessened compared to previous months.

Pricing trends indicate that fewer businesses are raising prices; only a net 21% did so in August—the lowest rate this year—and inflation concerns held steady among respondents.

Profitability reports improved slightly; among those seeing lower profits, weak sales were most often blamed.

Financing issues remained relatively stable with only four percent naming them as their top concern. Borrowing activity declined modestly; just under one-quarter regularly borrow funds—a rate not seen since late 2021—with loan rates dropping to their lowest since May 2023.

Business outlooks remain cautious: fewer expect better conditions ahead or see it as a good time to expand operations compared with July figures.

Taxation continues as a leading concern after labor issues; government regulations were also noted more frequently this month.

NFIB’s Research Center has been collecting data on small business economic trends since the early seventies through regular surveys among its members. The current survey was conducted during August 2025 and forms part of ongoing monthly reporting released every second Tuesday.