Small Business Optimism Edges Higher Despite Labor Concerns

Small-business confidence ticked up in November, with owners reporting stronger sales expectations and hiring plans surging to a 12-month high even as labor quality remained their top concern and uncertainty rose, according to a new report from the National Federation of Independent Business (NFIB).

The NFIB Small Business Optimism Index rose 0.8 points to 99.0 last month, staying above its 52-year average of 98, per the Dec. 9 report. Six of the index’s 10 components improved, led by a sharp rise in owners expecting higher real sales.

A net 15 percent of owners expect real sales to rise, up nine points from October, marking the biggest contribution to November’s increase in the overall optimism index.

NFIB research center executive director Holly Wade described the sharp rise in sales expectations as a “really good sign,” noting that the strength comes despite recent indications that consumers may be scaling back their spending.

At the same time, the group’s uncertainty index climbed three points to 91, driven largely by growing doubts about capital investment plans in the months ahead.

“Although optimism increased, small business owners are still frustrated by the lack of qualified workers,” NFIB chief economist Bill Dunkelberg said in a statement.

“Despite this, more firms still plan to create new jobs in the near future.”

The November improvement marks a reversal from October, when the index slipped to 98.2 on declining sales and profits and a softening outlook for demand.

Labor Quality Remains Top Problem

Twenty-one percent of owners cited labor quality as their single biggest problem—down six points from October’s spike but still the top issue and six points ahead of inflation, which ranked second.

NFIB’s monthly jobs data showed 33 percent of owners had openings they could not fill, the first increase in unfilled positions since June and well above the long-term average of 24 percent. Nearly 9 in 10 employers hiring or trying to hire reported “few or no qualified applicants.”

Despite the struggles, hiring intentions improved notably. A net 19 percent of owners said they plan to create jobs in the next three months, the highest reading of 2025, and the last time it was matched was in December 2024.

The jump in small business hiring intentions hints at a possible firming of the labor market in the coming months. The firmer hiring outlook contrasts with other indicators: payroll processor ADP reported that the private sector shed 32,000 jobs in November—its weakest showing since early 2023—driven by steep employment losses at small firms.

Gallup, meanwhile, found that only one-third of Americans believed November was a good time to find a quality job, the lowest reading in nearly five years.

The optimistic signal follows a downbeat report from payroll processor ADP, which found that the private sector shed 32,000 jobs in November—the weakest showing since early 2023—driven by steep losses at small businesses.

The brighter outlook also follows a Gallup poll showing that just a third of Americans said in November that now is a good time to find a quality job—the weakest reading in nearly five years.

Broader expectations were less upbeat. The share of small business owners anticipating better business conditions over the next six months fell five points to a net 15 percent, extending a slide that has erased 32 points since January.

Profit trends improved modestly, with slightly more businesses reporting better earnings driven by stronger sales, typical seasonal patterns, and higher selling prices. Among those reporting weaker profits, most pointed to softer sales and rising material and labor costs.

Price Pressures Reemerge

Inflation concerns intensified in November. The share of owners raising average selling prices jumped 13 points to a net 34 percent, the sharpest monthly increase in the NFIB survey’s history and the highest reading since March 2023. Price hikes remain far above the NFIB’s long-term monthly average of 13 percent, pointing to renewed inflationary pressure.

Looking ahead, a net 30 percent of firms expect to raise prices in the next three months, while a net 24 percent plan to boost worker compensation—a five-point increase from October. Fifteen percent of owners cited inflation as their biggest problem, up three points from the month before.

Despite persistent hiring challenges and renewed price pressures, broader economic expectations have brightened somewhat.

Economists surveyed by the National Association for Business Economics now project 2 percent GDP growth in 2026, up from a prior forecast of 1.8 percent, supported by resilient consumer spending and a rebound in business investment.

The Organisation for Economic Co-operation and Development also recently upgraded its U.S. outlook, citing exceptional investment in information-processing equipment, software, and data center construction.