On Friday the jobs report said the U.S. economy shed 23,000 positions in July. On Tuesday, Main Street effectively replied: we’re not buying it.
The NFIB Small Business Optimism Index jumped to 99.8 in July, up from 97.4 in June and comfortably ahead of the 97.5 consensus. It’s the highest reading in nearly a year — and it landed just three days after the most disappointing employment report of 2026.
Small business owners aren’t just feeling better. They’re hiring. A net 20% of owners plan to create new jobs over the next three months, a 9-point jump from June and the highest reading since October 2022. When the Bureau of Labor Statistics says the economy is shedding workers, half a million small businesses are telling the NFIB they need more of them. Somebody’s wrong — and history suggests the NFIB survey has a decent track record of calling turns before the BLS data catches up.
The Numbers
- Headline Optimism Index: 99.8 vs. 97.4 prior, consensus 97.5 (source: NFIB/Trading Economics)
- Hiring Plans: Net 20% planning to add jobs, up 9 points from June — highest since October 2022
- Components: 8 of 10 sub-indices rose; only sales expectations and inventory levels declined (both down 2 points)
- Labor Quality: Remained the #1 reported problem — owners want to hire but can’t find qualified workers
- Price Plans: Net percent planning price increases fell 4 points, offering a modest inflation tailwind
- Uncertainty Index: Rose 2 points, driven by hesitation around expansion and capital spending
The Tension Nobody’s Talking About
Here’s the puzzle. The BLS establishment survey reported a net loss of 23,000 jobs. The household survey showed 264,000 people dropped out of the labor force. But the NFIB — surveying actual business owners making actual payroll decisions — says hiring intentions haven’t been this strong in nearly four years.
Part of this is timing. The NFIB survey was conducted throughout July, while the BLS reference week was mid-month. If sentiment shifted late in the month — perhaps after inflation showed signs of cooling or the Fed signaled it was done hiking — the NFIB would catch that turn before the payroll data could.
Part of it is composition. The NFIB surveys firms with fewer than 500 employees — Main Street, not Wall Street. Small businesses are disproportionately service-sector, where demand has held up better than in manufacturing and tech. The BLS headline number gets dragged down by big-firm layoffs that don’t touch the local diner, the plumbing contractor, or the independent hardware store.
Eight of ten components rose. Hiring plans led the charge. That’s not noise — that’s signal.
The Market Context
The NFIB beat lands in a tricky week. Oil prices are jumping on renewed Hormuz Strait tensions. Cleveland Fed President Hammack reiterated that it will take more than one rate cut to bring inflation under control — and Bank of America issued what it called a “stark warning” on the Fed’s path forward. Wednesday’s CPI report will either validate the small-business optimism or send a chill through it.
If the CPI shows inflation continuing to ease, the NFIB data suggests the soft landing narrative has legs — small businesses see demand holding up without needing to push through aggressive price increases. If CPI surprises to the upside, the hiring plans in this survey become a liability: employers adding workers into a margin-squeezing environment.
Bottom Line
Friday’s jobs report was backward-looking. The NFIB survey is forward-looking. Right now the forward-looking data says the American small business owner — the person signing the paychecks, ordering the inventory, and staring at the bank balance — is more confident than they’ve been all year.
That doesn’t mean the jobs report was wrong. It means the two data sets are capturing different ends of the same economy: big firms are trimming, small firms are hiring, and the net picture depends on which one you’re looking at. If the NFIB is right and hiring plans translate into actual payrolls, the August jobs report should look very different from July’s.
Tomorrow’s CPI is the next test. Until then, Main Street has spoken — and it’s not panicking.