The National Federation of Independent Business (NFIB) reported a rise in its Small Business Optimism Index for May, increasing by three points to 98.8, slightly above the long-term average of 98. The index reflects improvements in expected business conditions and sales expectations. However, the Uncertainty Index also rose by two points to 94.
“Although optimism recovered slightly in May, uncertainty is still high among small business owners,” stated NFIB Chief Economist Bill Dunkelberg. He added that while economic challenges persist, there are positive expectations regarding business conditions and sales growth.
In North Dakota, small business owners show cautious optimism with improved expected business conditions but remain concerned about high taxes. “This makes it even more important for lawmakers in Washington, D.C., to follow the lead of our North Dakota delegation and support making the Small Business Tax Deduction permanent,” said NFIB North Dakota State Director Don Larson.
Key findings from the report include a significant increase in owners viewing current inventory stocks as “too low,” marking the largest monthly increase since August 2022. Additionally, there was a notable rise in the net percentage of owners expecting better business conditions and higher real sales volumes.
The report highlights that labor quality concerns have decreased slightly, while taxes remain a major issue for small business owners. In terms of employment, 34% reported job openings they could not fill, consistent with April’s figures.
Labor costs were identified as an increasing concern for business owners. Despite this, fewer owners plan to raise compensation compared to previous months.
Capital outlays saw some fluctuation, with plans for future investments increasing but recent expenditures decreasing slightly from earlier in the year.
Sales issues persisted with no change in reports of poor sales being a top problem. Inventory gains remained stable while price hikes were planned by a greater percentage of businesses compared to April.
Profit trends showed a decline with weaker sales and rising material costs cited as contributing factors. Financing concerns increased slightly with more reporting difficulties obtaining loans or facing higher interest rates.
Overall expansion plans saw minor improvement but remain historically low according to the survey data collected by NFIB’s Research Center since 1973. The survey results were based on responses from NFIB members during May 2025 and are released monthly on the second Tuesday.
