U.S. Data Pulse: May NFIB: Soft Confidence, Rising Uncertainty, and Firmer Price Signals

Research evidence excerpt

U.S. Data Pulse: May NFIB: Soft Confidence, Rising Uncertainty, and Firmer Price Signals

UpdateM

The NFIB Small Business Optimism Index fell 0.6 points in May to 95.3, below its 6-month

average and roughly at the same level as on"Liberation day". Of the 10 Optimism Index

components, 3 increased, 6 decreased and 1 was unchanged. Small business optimism has

retreated from its post-election peak of 105.1, but remains well above its 2022-24 average.

Uncertainty increased, as the index rose 3 points to 91 in May, above its average of 90 in

1Q26. It remained lower than its level around"Liberation day" but was higher than levels

seen during COVID. The recent increase, however, suggests that small businesses may

have been more affected by higher energy prices and geopolitical uncertainty in May

compared to April.

Hiring conditions weakened. 29% of small business owners reported unfilled job openings,

down 5 points from April. Meanwhile, 9% planned to increase hiring, down 4 points.

Finding qualified labor continues to be a challenge: the share of firms reporting few or no

qualified applicants was 46%, unchanged from April. The strength of the recent jobs

report was not reflected in the NFIB indicators.

The former two categories – unfilled positions and hiring intentions – are, in our view, two

important signals about the health of labor market conditions. Hiring intentions have

rebounded modestly after their post-Liberation Day decline and remain broadly in line

with post-COVID averages. Hard-to-fill positions have been on the decline since COVID,

but the series remains above prior cycle peaks, indicating that qualified labor remains

scarce. We suspect this also has something to do with restrictive immigration policies that