Key Highlights

  • NFIB Small Business Optimism index fell to 95.3 in May 2026, lowest since October 2024
  • Net 34% of small business owners plan to raise prices, highest share since July 2022
  • Hiring plans dropped to a six-year low; only 9% of owners plan to create new jobs
  • Supply chain disruptions widened, with 70% of businesses reporting some degree of impact
  • Capital-expenditure/">Capital Expenditure intentions fell to the lowest level since March 2009

Sentiment Under Pressure

On June 9, 2026, the National Federation of Independent Business reported its Small Business Optimism Index at 95.3 for May, down from 95.9 in April and the lowest reading since October 2024. The figure remains below the survey's 52-year historical average of 98.0. The NFIB Uncertainty Index climbed three points to 91, running well above its long-run average of 68.

Fuel price Volatility, supply chain strain, and rising Inflation expectations are compressing small business margins in ways that larger corporate competitors, with greater pricing power and operational scale, are better positioned to absorb. Geopolitical developments have amplified the pressure. A US-Israeli military conflict with Iran, now entering its fourth month, has disrupted energy flows through the Strait of Hormuz, feeding into cost inflation across fuel and Commodity-linked supply chains.

Price Pressures at Multi-Year Highs

Inflation has reasserted itself as a central concern. A net 36% of owners reported raising average selling prices in May, the highest reading since March 2023 and well above the historical average of 13%. Looking forward, a net 34% plan further price increases over the coming quarter, the strongest reading since July 2022.

Eighteen percent of owners identified inflation as their single most important business problem, placing it second only to taxes at 19%. Government data is expected to confirm the trend. Economist forecasts anticipate a year-on-year Consumer Price Index gain of 4.2% for May, which would be the sharpest annual increase since April 2023, up from 3.8% in April.

Labor Market Outlook Softens

Despite headline employment data showing three consecutive months of solid Job growth and an Unemployment rate steady at 4.3%, small business owners remain considerably more cautious. The NFIB Employment Index edged down to 100.3 from 100.4 in April, declining for the third straight month.

Forward-looking hiring intentions weakened sharply. Only a seasonally adjusted 9% of owners plan to create new jobs over the next three months, down four points from April and the lowest reading since May 2020. The share of owners reporting unfilled Job Openings fell five points to 29%, also a six-year low. Worker shortages persist in specific sectors, including agriculture, where tighter immigration enforcement appears to be a contributing Factor, and Wholesale Trade, where applicant no-shows at hiring stages remain a reported operational problem.

Capital Spending and Supply Chain Deterioration

Investment appetite has weakened significantly. Just 16% of owners plan capital outlays over the next six months, the lowest reading since March 2009. Supply chain conditions also deteriorated, with 70% of owners reporting some degree of disruption, up six points from April, as geopolitical and logistics pressures extend their reach across the small business economy.

Conclusion

The May NFIB data presents a small business sector under compounding pressure. Inflation expectations sit at multi-year highs, hiring intentions are at their softest since 2020, and capital spending intentions have not been this weak since the post-financial crisis period. The resolution of geopolitical uncertainty, particularly around energy supply, and the trajectory of Federal Reserve policy will be decisive in determining whether confidence stabilises or continues to erode through the remainder of 2026.