U.S. Small-Business Sentiment Slides on Lower Profits — Update

By Don Nico Forbes

Optimism among U.S. small businesses continued to fall in October on weaker earnings trends, with labor shortages and the government shutdown also dragging on sentiment.

The National Federation of Independent Business said Tuesday that its small-business optimism index slipped to 98.2 in October from 98.8 in September.

The figure remains above the index's long-term average of 98, and came in line with a forecast of economists polled by The Wall Street Journal.

The fall in confidence was driven in part by a hit to profits in the third quarter, on weaker sales and an increase in material costs, the survey said.

"Optimism among small businesses declined slightly in October as owners report lower sales and reduced profits," said NFIB Chief Economist Bill Dunkelberg.

Uncertainty among businesses, while lower than in September, remained high, the NFIB said. The November elections and the government shutdown added to concerns, while tariff policy continued to put pressure on input costs.

The NFIB survey provides a monthly snapshot of small businesses in the U.S., which account for nearly half of private-sector jobs. The small-business index will be closely watched by markets due to a lack of available data amid the U.S. government shutdown.

Labor quality was the most pressing concern for Main Street, with 32% of all owners reporting job openings they couldn't fill--the highest reading since December 2020.

"Many firms are still navigating a labor shortage and want to hire but are having difficulty doing so," Dunkelberg said.

The government shutdown is expected to depress wage growth in the short term, with many government employees missing paychecks, according to the report. This will directly and indirectly hit some small businesses.

Inflation was the most pressing concern for 12% of owners in operating their business, down 2 points from September, the NFIB noted.

Still, while uncertainty remained high, the index fell 12 points on month to 88--the lowest level this year. This was driven by a decrease in owners reporting uncertainty about the potential to expand operations in the coming months.

Write to Don Nico Forbes at don.forbes@wsj.com

(END) Dow Jones Newswires

November 11, 2025 06:28 ET (11:28 GMT)