The monthly Jobs Report from NFIB, released today, showed a “surprising and substantial tightening of the labor market” as “reports of labor quality and availability as the most serious business problem jumped 8 points to 27%.”
The Small Business Employment Index rose after four consecutive months of decline, registering 102.1 in July after measuring 100.2 in June. The current reading is above the 2025 average of 101.2 and the historical average of 100.0
The NFIB Small Business Employment Index is a measure of the current state of the small business labor market. The Index integrates actual and planned changes in employment and employee compensation into a singular data point. A higher Index reflects an overall tighter labor market; a lower Index reflects an overall weaker labor market.
“It’s nice to see a slight improvement in our Jobs Report, but I don’t want to read too much into it at the moment,” said Anthony Smith, state director for NFIB in Oregon. “Our unemployment rate is way out of step with the rest of the country, and, in its just released rankings of states, U.S. News & World Report has us at 39th overall and 48th in the ‘Economy’ category.”
From NFIB Chief Economist Bill Dunkelberg
“Labor quality or availability as the top concern for Main Street rose in July, with employment growth falling behind the pace of economic growth. Most of the primary spending driving the economy is heavily concentrated in big projects like new data centers for AI. Hiring plans suggest that small business owners are expecting a surge in business that will require more workers. While the labor force remains stagnant, hiring will be sufficient to keep the unemployment rate about the same as compensation inches higher.”
Highlights from the Latest NFIB Jobs Report
- A seasonally adjusted net 20% of owners plan to create new jobs in the next three months, up 9 points from June.
- Hiring plans are at their highest level since October 2022 and are 9 points above the historical average.
- In contrast to the forward-looking plans, actual hiring activity declined 1 point from June, with 61% of owners reporting hiring or trying to hire in July.
- A seasonally adjusted net 31% reported raising compensation, up 3 points from June. A net 19% (seasonally adjusted) plan to raise compensation in the next three months, up 2 points from June.
