The NFIB Small Business Employment Index shifted upward in July, hitting 102.1. This marks a rebound following four straight months of decline. The current figure sits above both the 2025 average of 101.2 and the long-term historical average of 100.0. While the index shows movement, small business owners continue to face hurdles in staffing their operations.
Data from the report shows that 36 percent of owners reported job openings they could not fill. This is the highest reading since June 2025. Skilled labor remains the primary pain point, with 31 percent of owners struggling to fill these roles. Unskilled labor openings also saw an increase, climbing 2 points to reach 14 percent. NFIB Chief Economist Bill Dunkelberg noted that employment growth is lagging behind broader economic trends, which are currently driven by large-scale projects like AI data centers.
Looking ahead, small business owners remain optimistic about hiring. A seasonally adjusted net 20 percent of owners plan to create new jobs over the next three months. This represents a 9-point jump from June and the highest level of planned hiring since October 2022. Despite these plans, actual hiring activity dipped by 1 point in July as owners reported a lack of qualified applicants for their open positions.
Labor quality now stands as the most critical issue for Main Street. In July, 27 percent of owners cited this as their single most important problem. This figure is 15 points above the historical average. While hiring plans are aggressive, the stagnant labor pool forces many owners to make tough choices, such as reducing business hours or pausing planned expansions.
Compensation trends also reflected these competitive pressures. A net 31 percent of owners reported raising wages in July, up 3 points from the previous month. Projections for the coming months suggest this trend will continue, with 19 percent of owners planning further compensation increases. As firms compete for a limited supply of workers, both actual and planned wage adjustments remain firmly above historical averages.