Minnesota State Wire

The NFIB Small Business Optimism Index increased by 0.5 points in August, reaching 100.8, which is nearly three points above its long-term average. The report shows that out of the ten components making up the index, four rose, four fell, and two were unchanged. The biggest contribution to the increase came from more owners expecting higher real sales.

According to NFIB Chief Economist Bill Dunkelberg, “Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings. While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street.”

Jon Boesche, NFIB Minnesota State Director, commented on the findings for Minnesota: “Minnesota’s small businesses are sharing in the national optimism, but key challenges remain. While sales expectations are up, the ongoing labor shortage continues to be a top concern. The state’s workforce development efforts must align with the needs of our small businesses to maintain this positive momentum.”

The report details several indicators for August:

- Fourteen percent of owners rated their business health as excellent (up one point), while 54% said it was good (up two points). Twenty-seven percent described their business as fair (down four points), and 4% as poor.

- Labor quality remained the most significant problem for small business owners at 21%.

- Thirty-two percent of owners reported job openings they could not fill—down one point from July—the lowest since July 2020.

- The net percentage of owners expecting higher real sales volumes increased by six points to a net 12%.

- A net zero percent viewed current inventory stocks as too low, up three points from July.

- Fewer owners raised average selling prices; this figure dropped three points to a net 21%, marking its lowest level this year.

- Positive profit trends improved by three points but remained negative at a net -19%, still the best result since March 2023.

- The average rate paid on short maturity loans declined to 8.1%, down from July and marking its lowest since May 2023.

- Regular borrowing among business owners decreased by two points to 23%, last seen below this level in November 2021.

Labor shortages continue across sectors such as construction, manufacturing, and transportation. Nearly half of construction firms had unfilled positions—though this is down from previous months—indicating some easing in job market tightness.

Fifty-three percent of owners hired or tried to hire during August; however, most found few or no qualified applicants.

Compensation pressures persisted: seasonally adjusted net figures show that 29% raised compensation (up two points) and 20% plan further increases (up three points).

Capital spending remains subdued despite a slight uptick; just over half reported capital outlays recently.

Inventory levels showed modest gains but remain relatively stable compared with prior months.

Supply chain disruptions affected more than half of respondents but have eased compared with July numbers.

Inflation continues as an issue for some: eleven percent cited it as their main problem for a third straight month.

Other challenges include taxes (17%), government regulations (9%), and competition from large businesses (5%).

The NFIB Research Center has collected data on small business economic trends through quarterly surveys since late 1973 and monthly surveys since 1986. Respondents are randomly selected from NFIB membership. The latest survey was conducted in August 2025.