Rushmore State News

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased by 1.7 points in July, reaching 100.3, which is slightly above the long-term average. The improvement was driven mainly by more owners reporting better business conditions and a greater number indicating it is a good time to expand operations. However, the Uncertainty Index also rose significantly, up eight points from June to 97.

Labor quality has emerged as the most pressing issue for small businesses, with 21% of owners identifying it as their main concern—a five-point increase from June.

“Optimism rose slightly in July with owners reporting more positive expectations on business conditions and expansion opportunities,” said NFIB Chief Economist Bill Dunkelberg. “While uncertainty is still high, the next six months will hopefully offer business owners more clarity, especially as owners see the results of Congress making the 20% Small Business Deduction permanent and the final shape of trade policy. Meanwhile, labor quality has become the top issue on Main Street again.”

In South Dakota, NFIB State Director Jason Glodt noted local improvements but acknowledged ongoing challenges: “Small business sentiment in South Dakota is on the rise, with many owners reporting better business conditions. Much of this is thanks to the 20% small business tax deduction being made permanent. Nonetheless, the struggle to fill job vacancies continues to be a major issue.”

The report found that overall business health improved in July; 13% rated their businesses as excellent and 52% as good—both figures higher than June’s survey results. The percentage rating their businesses as fair or poor decreased.

Poor sales became a growing concern for some businesses; those citing it as their top problem reached 11%, marking its highest level since early 2021.

Expectations for future conditions improved markedly: a net 36% expect better business conditions over the next six months, well above historical averages. Sixteen percent reported that now is a good time to expand—up five points from June.

Inflation remained steady as an important problem for 11% of respondents—the same rate seen since September 2021.

Other findings include:

- Plans for capital outlays rose slightly but remain below historic norms.

- Thirty-three percent had unfilled job openings in July—a decrease from June but still higher than usual.

- Most hiring employers struggled to find qualified applicants.

- A net negative nine percent reported higher nominal sales over three months.

- Owners planning price increases dropped four points from June but stayed above historical averages.

- Reports of positive profit trends did not improve; weak sales and rising material costs were common reasons for lower profits.

- Only four percent cited financing and interest rates as their top problem.

- Fewer small businesses are borrowing regularly compared to past levels.

Taxes ranked second among concerns at 17%, while government regulations fell slightly in importance at eight percent.

The data comes from monthly surveys conducted by NFIB’s Research Center using random samples drawn from its membership base. The survey informing this report was carried out in July 2025 and continues a research series that began quarterly in 1973 and monthly since 1986.