Businesses more optimistic as labor problems grow, prices rise

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(The Center Square) – Despite the ongoing challenges of finding employees, small businesses are a little more optimistic.

The National Federation of Small Business’ Optimism Index showed a rise of 1.2 points in July to 100.3, above the 52-year average of 98. Businesses are citing better conditions and expansion possibilities as the reason.

While the report does not offer state-specific data, NFIB Assistant State Director Cameron Garczyk pointed toward an extension of tax cuts as key to state businesses.

“Ohio’s small businesses are feeling more optimistic following Congress making the Small Business Deduction permanent and providing Main Street with lasting tax relief,” Garczyk said. "While hiring remains a significant challenge for owners, small businesses report better business conditions."

However, the group’s Uncertainty Index grew by 8 points in July to 97, and 21% of small business owners said labor quality is their single most important problem, a 5-point jump from June.

“The challenge of finding qualified workers is easing overall but still remained significant for many small business owners in July,” NFIB chief economist Bill Dunkelberg said. “The easing labor market pressures are also reflected in fewer firms raising compensation.” 

The report also showed that 11% of owners said poor sales were their top problem, the highest level to respond that way in more than four years.

Another 11% said inflation was their biggest problem, the highest reading in nearly four years.

All that comes as The Center Square reported Thursday that wholesale inflation surged last month, a sign that President Donald Trump's tariffs are boosting costs and higher prices may be on the way.

The Producer Price Index for final demand climbed 0.9% in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported Thursday. Final demand prices were unchanged in June and moved up 0.4% in May. On an unadjusted basis, the index for final demand advanced 3.3% for the 12 months ended in July, the largest 12-month increase since rising 3.4% in February 2025.