Small business confidence slipped in August as owners grappled with weaker sales and persistent concerns about inflation, workforce shortages and supply chain disruptions, according to the latest National Federation of Independent Business survey reported by The Lane Report.

The NFIB Small Business Optimism Index fell to 98.7 in August, down 1.1 points from July's near-12-month high of 99.8, though it remained above the 52-year average of 98.0. The organization's Uncertainty Index dipped 2 points to 89 but stayed well above its historical average of 68.

The retreat came after a brief rally in July driven by optimistic hiring plans. Analysts described the quick reversal as a sign that underlying confidence remained fragile. "Uncertainty remains elevated among small business owners as they face a mixed set of challenges with weakened sales, supply chain disruptions, and inflation pressures," NFIB Chief Economist Bill Dunkelberg said.

Tom Underwood, NFIB Kentucky State Director, said the national findings reflected challenges facing Kentucky's small business community. "Our small business members need certainty, but rising prices, sluggish sales and problems finding enough people to work are making it hard for them to plan ahead and serve their customers' needs," Underwood said.

Sales weakness particularly concerned owners. A seasonally adjusted net negative 9% reported higher nominal sales in the previous three months, down 5 points from July and the worst reading since November 2025. Inflation also intensified as a concern, with 16% of business owners calling it their most important problem, up 2 points and now tying taxes as the second-largest issue.

Labor challenges showed modest improvement but remained well above normal. Thirty-five percent of owners reported unfilled job openings, down slightly from July but 11 points above the historical average. Among the 56% of owners who attempted hiring, 82% said they found few or no qualified applicants.

Supply chain disruptions continued to hamper operations, with 62% of small business owners reporting some impact in August. Despite these headwinds, a majority of owners maintained positive views of their own businesses: 11% rated their health as excellent and 57% called it good, while 28% said conditions were fair.