US small business confidence slips in September as cost pressures persist

16:30

By: Azzat Manal

US small business confidence slips in September as cost pressures persist

Confidence among small businesses in the United States weakened in September 2026 as business owners continued to grapple with rising operating expenses, high borrowing costs and difficulties recruiting qualified workers. The latest figures suggest that many smaller firms remain cautious about expanding their operations amid uncertainty over the economic outlook.

According to the National Federation of Independent Business (NFIB), its Small Business Optimism Index fell by 0.8 points to 97.9 in September, slipping slightly below its 52-year historical average of 98. The decline indicates that sentiment remains fragile, even as some indicators of expected sales and inventory activity improved.

NFIB Chief Economist Bill Dunkelberg said small business owners were carefully weighing the effects of higher expenses, financing costs and recruitment challenges on their operations. These pressures can limit companies’ ability to invest, increase wages or expand their workforce, particularly when they have fewer financial resources than larger businesses.

Uncertainty also increased during the month. The NFIB Uncertainty Index rose by one point to 90, remaining well above its historical average of 68. The elevated reading reflects continued hesitation among business owners as they make decisions about staffing, spending and future growth.

Finding qualified employees remained the most frequently cited problem. The share of owners identifying labor quality as their main business concern increased by three percentage points to 26%, keeping it at the top of the list for a third consecutive month. Persistent recruitment difficulties can constrain productivity and make it harder for firms to meet customer demand.

Inflation ranked second among the main concerns, with 20% of respondents naming it as their biggest challenge, up four percentage points from August. The figure remains considerably higher than the historical average of 7%, highlighting the continued importance of prices and operating costs in business decision-making.

Other components of the survey presented a mixed picture. The net share of businesses planning to increase employment remained at 17%, while the proportion expecting to raise capital expenditure stood at 22%, down two percentage points from the previous month. These figures suggest that firms are still considering investment and hiring, but may be reassessing the pace of their plans.

Inventory intentions improved slightly, with the net share of businesses planning to increase stocks rising one point to 2%. Expectations for higher sales also strengthened, gaining three points to reach a net 9%. However, optimism about the broader economy weakened, falling four points to 6%, while the indicator measuring current job openings declined by three points to 32%.

Credit conditions offered little encouragement. The net share of owners expecting credit conditions to improve slipped one point to minus 3%. The business expansion indicator fell five points to 7%, and net profit trends declined by one point to minus 20%, reflecting the continuing strain on profitability.

Taken together, the results point to a challenging operating environment for America’s small businesses. Although some owners anticipate stronger sales and are considering higher inventories, persistent cost pressures, recruitment problems and uncertainty continue to weigh on confidence.

Small businesses play an important role in employment and local economic activity, making their investment and hiring decisions relevant to the wider economy. The September survey suggests that any improvement in their outlook will depend partly on whether inflation eases, financing becomes more manageable and employers can find the workers needed to sustain growth.