Small businesses reported that the level of worker shortages was higher in July, with a seasonally adjusted 36% of respondents in a National Federation of Independent Business survey released Thursday saying they were having trouble hiring the workers that they needed, up from 32% in the previous month and the highest since June 2025.
The NFIB's Small Business Employment Index rose to 102.1 in July from 100.2 in June, still above the historical average of 100.0 and the 2025 average of 101.2.
The percentage of business owners reporting labor quality as their top business concern rose to 27% from 19%, while labor costs were listed as single most important concern by 8%, the same as in June.
"Labor quality or availability as the top concern for Main Street rose in July, with employment growth falling behind the pace of economic growth," said NFIB Chief Economist Bill Dunkelberg. "Most of the primary spending driving the economy is heavily concentrated in big projects like new data centers for AI. Hiring plans suggest that small business owners are expecting a surge in business that will require more workers."
About 61% of owners said they were trying to hire in the month, down from 62% in June. Around 85% of the respondents who were hiring or trying to hire reported finding few or no qualified applicants for the position they were trying to fill.
Hiring plans for the next three months improved with a net 20% of respondents saying they expected to hire, up from 11% in June and the highest since Oct. 2022.
A seasonally adjusted net 31% of owners said they needed to raise compensation to hire workers in July, up from 28% in June. A net 19% of owners said they plan to raise compensation in the next three months, up from 17% in June.