Inside June’s NFIB Small Business Optimism Index

We love to keep a pulse on how small business owners are feeling, and this quarter it seems they’re just a bit wary. The NFIB Small Business Optimism Index for June 2025 edged down 0.2 points to 98.6, hanging just above the 51-year average of 98. And while the overall index was steady, several key components signaled shifting trends among small business owners. Let’s take a look at the findings.

Inventory Levels

One of the biggest shifts came from inventory data. A net –5 percent of owners said inventories were “too low”, down six points from May, while 12 percent reported inventories were “too high”, nearly doubling from the previous month. This suggests a growing inventory surplus, which could indicate slowing sales or an overestimation of supply.

Business Outlook & Sales Expectations

The net percentage of owners expecting better business conditions over the next six months fell by 3 points to 22 percent, although this still ranks above the long-term average of 3 percent. Similarly, expectations for higher real sales volumes declined by 3 points to 7 percent, indicating a more cautious growth outlook.

Capital Expenditures

Plans for capital spending in the next six months dipped slightly to 21 percent, down from 22 percent in May. This reflects small business owners’ hesitancy to invest amid mixed economic signals.

Labor Market & Compensation

Good help continues to be hard to find, as labor quality remains a top concern. In June, 16 percent of small business owners cited the quality of labor as their single biggest problem, unchanged from May. Meanwhile, job openings that could not be filled rose to 36 percent, and 58 percent of owners reported actively hiring, with 86 percent of them saying there were few or no qualified applicants. Despite these challenges, 13 percent of owners plan to create new jobs in the coming months, signaling resilience and long-term optimism.

Inflation & Input Costs

Inflation appears to be fading as a top-line concern. Only 11 percent of owners cited inflation as their most important business problem—the lowest share since September 2021. This is a positive shift compared to the inflationary pressures seen throughout 2022 and 2023. But something else took its place… keep reading.

Taxes & Other Top Problems

Taxes have overtaken inflation as the top concern for small business owners, with 19 percent of respondents calling them their number-one issue—the highest level since July 2021. Government regulations and competition from large businesses also ranked high, at 9 percent and 7 percent respectively. Interestingly, concerns over financing and interest rates fell to just 3 percent, showing that while credit conditions may remain tight, they are not front-of-mind for most owners this summer.

Business Health Perceptions

When asked about their overall business health:

• 8 percent said “excellent” (down 6 points),
• 49 percent said “good” (down 6 points),
• 35 percent said “fair” (up 7 points),
• 7 percent said “poor” (up 3 points).

This reflects a slight dip in owner sentiment, and it might reflect concerns about inventory levels and sales trends.

While the overall index remains steady, the June data highlights emerging pressures—especially inventory overages, labor mismatches, and rising concerns over tax policy. But there’s a bright side! Inflation fears continue to recede, and owners are showing resilience through cautious hiring and long-term planning. For small businesses, this is a great time to manage costs, streamline hiring efforts, and stay tuned to policy developments that may affect taxation and regulation—and the Financial Pantry is a prime spot for just that. We’re always covering the latest trends and regulations that small business owners should know. Head over to ARF Financial and get the tools, resources, and financial assistance you need to succeed in this business landscape. While you’re there, explore Independence Bankroll—our newest revolving line of credit, with features unlike any other loan product!