The National Federation of Independent Business said its Small Business Optimism Index fell 0.1 point to 97.8 in October, slightly below the 53-year average of 98.0. The reading has now ticked lower for three straight months, and economists polled by The Wall Street Journal had expected an increase to 98.1.
The group's uncertainty index fell 6 points to 84, its lowest since December 2025, though still well above its historical norm near 68. The September NFIB survey has its own write-up.
Owners sounded better about their own books. Asked to grade their business, 69% said excellent or good, against 61% in September, while a net 8% expect better conditions over the next six months and 11% called it a good time to expand.
The cost problem moved from inflation to taxes
Labor quality or availability stayed the top headache at 25%, the fourth month in a row. Taxes jumped 10 points to 21%, the highest since May 2021, pushing inflation into third place at 17%.
Labor Quality Still Tops Small Business Worries With Taxes Close Behind
Share of owners naming each as their single most important problem, October 2026, %
Bar chart. % of owners. Labor quality: % 25%. Taxes: % 21%. Inflation: % 17%.
Source: NFIB, Piedmont Crescent Capital
Hiring demand firmed up. Job openings owners couldn't fill rose to 36%, 12 points above the historical average, and 86% of those hiring reported few or no qualified applicants.
Pricing plans tell the sharper story. A net 37% of owners plan to raise selling prices in the coming months, the most in more than four years, and a net 33% already did.
Borrowing costs are creeping into Main Street
A net 13% of owners paid a higher interest rate on their most recent loan, up 5 points and the highest since August 2024. The average short-term rate rose 0.3 point to 8.5%. Regular borrowers are a minority at just 25% of owners, against a historical average of 34%.
Investment plans softened in response, with capital outlay plans slipping to 21%, a third straight monthly decline from July's 25%.
Sales were mixed, with a net negative 4% of owners reporting higher nominal revenue over the past three months, a 4-point improvement from September. Earnings aren't keeping pace with sales. The earnings trend fell 3 points to a net negative 23%, the weakest since March, which helps explain why so many owners plan price hikes.
For investors holding small-cap exposure, the survey describes companies that are stabilizing while their margin squeeze shifts shape. The small-cap catch-up question has its own history.
Stronger hiring plus hotter price plans also reinforce the case for another Federal Reserve rate increase in December. The Fed's internal debate over further hikes has its own angles.
Small businesses account for nearly half of private-sector jobs, so what Main Street charges customers tends to show up in the inflation data a few months later. The next NFIB survey lands Dec. 8, the day before the Fed's decision.
