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Small business owner optimism is on the rise. That's according to the newest numbers from the NFIB Small Business Optimism Index. The 93.7 reading for July, the highest since February of 2022. But that's still below the 50-year average of 98. Here to help us break down the latest figures and to give us some insight into how small business owners are feeling these days, we've got Holly Wade. She is the NFIB Research Center's executive director. Holly, thank you so much for joining us here. I just want to get your broad read here on where we stand with this reading and what's jumping out as some of the most pressing issues for small businesses right now.

Sure, so thanks for having me on your show. Um the index did jump 2.2 uh last month, which was a great sign that things are easing up for small businesses across the country, especially their outlook for business conditions. That improved 18 points from June. And it was a great kind of signal that small businesses, those headwinds that we've been talking about for months now are starting to ease up. So sales expectations going forward improved. Um the those planning to increase compensations fell a bit, and also those that are increasing prices fell also, and those planning to increase prices. So all of those headwinds, the inflation picture, even though it is still the single most important problem for one in four small business owners, those pressures have eased. And that's a great sign for small businesses and looking forward and how they're dealing with operating their business, the uncertainty element that still is a focus for many of them, what the six months look like as far as business conditions. But those headwind pressures that we've been talking about for the last number of years, they are easing up, and we've seen that index uh increase and and and um are supported by all of that over the last four months. And so that's a really great sign for us looking at the small business sector.

I want to come back to the employment side of that, but let's stay on the pricing elements as you were just mentioning a moment ago in the stat that you had mentioned, the net percentage of owners raising their average selling prices actually fell five points from June to a seasonally adjusted net 22%. How is this expected to impact volumes? How much they're able to work through?

Certainly. So this last month uh there was a higher number of those that said that they expect sales to increase. Um they're working or competing um with their neighboring businesses, so they're having to kind of adjust those prices accordingly to keep their customers. We all know that consumers and also businesses are having a bit of price fatigue. They are not enjoying the last couple years of having to increase prices more than they ever have before or more frequently than they have before. So easing off those pressures have uh relieved a lot of stress among small business owners. And they're expecting sales to um even improve over the next three months, and that's a great sign for those small business owners still navigating a lot of these headwinds, but the headwinds aren't quite as strong as they have been.

Okay, and so as of right now, how are small businesses investing back into their own businesses? Where are those capital outlays expected to move from here, and how could that also perhaps give us a little bit of insight on where we might see them do even more hiring?

Sure. So we're looking at still record levels highs of those unfilled job openings that have been very elevated for a number of years, remain elevated. So that's a good sign going forward that the employment sector of small businesses still remains very strong. As far as capital spending, that has been pretty tempered over the last couple years. Um not as much as we would have normally expected in a in a growth environment. Um but interest rates, even though financing is their their number one source of financing are profits, those interest rates are really expensive for many small business owners. And so they're hesitating a bit on whether to make those big expenditures, maybe wait for a couple months to see if the cost of financing starts to ease up a bit and become more affordable for them.

Holly, great to catch up with you. Thanks so much for taking the time here with us. NFIB Research Center's executive director, Holly Wade. Thank you.

Thank you.