News & Insights

The NFIB Small Business Optimism Index stepped up 0.5 points to 100.8 in August, remaining above the 52-year average of 98. August’s increase stemmed primarily from a rise in those expecting real sales to be higher. Of the 10 components included in the index, four increased, four decreased and two stayed the same. Meanwhile, the Uncertainty Index fell four points to 93, due to a decrease in uncertainty about financing conditions and planned capital expenditures. Nonetheless, the Uncertainty Index remained well above the 51-year average (68) and the average since 2016 (80).

Labor quality ranked first in the list of concerns for small business owners again in August, with 21% reporting it as the most important problem, the same percentage as July. The challenge of filling open positions remains acute, particularly in manufacturing, construction and transportation. On the other hand, fewer small business owners reported jobs they could not fill in August, down one point to 32% in August.

Taxes remained the second top problem for small business owners in August, with 17% reporting them as their most important problem, unchanged from July. Meanwhile, inflation ranked third in the list of concerns, with 11% reporting it as a top problem. Price increases remain above average, suggesting continued inflationary pressure and that tariffs may be starting to impact pricing.

A net 29% of small business owners reported raising compensation, up two points in August after decreasing six points in July. Meanwhile, 20% of business owners plan to raise compensation in the next three months, up three points from July. Pressure on profitability eased slightly, improving three points from July to a net negative 19%. Among owners reporting lower profits, 37% blamed weaker sales 18% cited increased material costs, 10% noted price change for their product(s) or service(s) and 9% said labor costs. Meanwhile, 3% reported their last loan was harder to get than previous attempts, down one point from July, but a net 6% of owners cited paying a higher rate on their most recent loan, up one point from the prior month.

The outlook for general business conditions decreased two points to 34%, a positive read by historical standards. Additionally, 14% reported that it is a good time to expand their business, down two points from July, which is not a strong read compared to times of economic expansion. Nonetheless, small business owners remain optimistic that their uncertainties will be resolved and business conditions will improve by year-end.

The Producer Price Index for final demand (also known as wholesale prices) edged down 0.1% over the month in August, after prices jumped 0.7% in July. Over the year, producer prices moved up 2.6% in August, down from 3.1% in July. Meanwhile, prices for final demand excluding foods, energy and trade services increased 0.3% over the month in August, after rising 0.6% in July. Prices for these goods advanced 2.8% from August 2024.

Within final demand, prices for services slipped 0.2% in August, the largest decrease since April. Meanwhile, prices for goods ticked up 0.1%. The decline in prices for services is attributed to a 1.7% drop in margins for trade services, indicating companies are absorbing a larger share of those higher costs. Within the final demand services index, margins for machinery and vehicle wholesaling fell 3.9%, accounting for three-quarters of the August decrease. Within the final demand goods index, prices for iron and steel scrap climbed 2.7% over the month but rose just 2.3% from August 2024. Meanwhile, prices for private capital equipment for manufacturing industries jumped 4.4% over the year.

Processed goods for intermediate demand edged up 0.4% in August, down from 0.7% in July. A major factor in the advance can be attributed to a 5.5% gain in the aluminum mill shapes index. On the other hand, the index for utility natural gas declined 1.8%. Over the year, the index grew 2.6%, the largest 12-month increase since the 3.9% rise in January 2023.

Meanwhile, prices for unprocessed goods for intermediate demand fell 1.1% in August, after advancing 2.3% in July. More than three-quarters of the August drop can be traced to a 2.5% decline in the prices for unprocessed energy materials, with crude petroleum falling 2.8%. Additionally, prices for unprocessed nonfood materials less energy and for unprocessed foodstuffs and feedstuffs decreased 0.5% and 0.3%, respectively. Over the year, prices for unprocessed goods for intermediate demand increased 3.0%, the largest 12-month gain since the 6.5% rise in March.

In August, consumer prices increased 0.4% over the month and 2.9% over the year, up from the 2.7% annual rise in July. Core CPI, which excludes more volatile energy and food prices, rose 0.3% over the month and 3.1% over the year, slightly higher than the 3.0% 12-month increase in the month prior.

Energy costs increased 0.7% over the month in August, after declining 1.1% in July, and ticked up 0.2% over the year. Within the energy index, gasoline prices jumped 1.9% from July, after plunging 2.2% the month prior, and declined 6.6% from August 2024. Meanwhile, utility (piped) gas prices dropped 1.6% over the month, but surged 13.8% over the year.

In August, food prices rose 0.5% over the month, after staying the same as July, with prices for food away from home increasing 0.3%. Over the year, food prices advanced 3.2%, with food away from home jumping 3.9%. Meanwhile, prices for food at home climbed 0.6% from July and 2.7% from August 2024. All six indexes for major grocery store food groups increased in August.

The shelter index grew 0.4% over the month and 3.6% over the year, a significant driver in the headline increase, while also continuing its downward 12-month trend since peaking at an 8.2% annual gain in March 2023. Meanwhile, prices for used cars and trucks soared 1.0% over the month and 6.0% over the year. Relatedly, motor vehicle maintenance and repair jumped 2.4% from July and 8.5% from August 2024.

Both the headline and core inflation rate have ticked up in recent months amid an increase in core goods prices, but likely not enough to deter Federal Reserve officials from cutting their interest rate target later this week, particularly since weakness in the labor market has increased notably. Therefore, markets anticipate that the Federal Open Market Committee will lower its interest rate target by 25 basis points at its meeting this week, with a growing segment of the market calling for a 50 basis point cut.

Mexico announced this week that it will raise tariffs by 50% on automobiles made by China and other Asian countries (Reuters, subscription).

A broad effort: The increase is part of a broad range of trade policy changes, “which will increase tariffs to varying degrees on goods across multiple sectors including textiles, steel and automotive [vehicles], would impact $52 billion of imports.”

• Mexican tariffs on Chinese cars currently stand at 20%.
• Other policy changes include a 35% tariff on steel, toys and motorcycles and tariffs on textiles of between 10% and 50%.

The rationale: “[Mexican Economy Minister Marcelo] Ebrard said the measures, which come just within limits imposed by the World Trade Organization, were intended to protect jobs in Mexico as Chinese cars were entering the local market ‘below what we call reference prices.’”

The big picture: Analysts see this move as an effort to align Mexican trade policy with the Trump administration’s aims, as the two countries continue to negotiate over their own trade ties.

• President Trump has urged U.S. trading partners to reduce their economic ties with China on security grounds.
• “‘The U.S. is not going to allow China to use Mexico as a backdoor,’ said Mariana Campero of the CSIS Americas Program, adding that Mexico has doubled its trade deficit with China in the last decade, hitting $120 billion last year.”

USMCA: The U.S.–Mexico–Canada Agreement, which the NAM was instrumental in achieving during President Trump’s first term, is up for review in 2026.

• The NAM remains one of the foremost backers of North American trade, at a time when one-third of all imported manufacturing inputs now come to the U.S. from Canada and Mexico.
• The trade agreement has also been crucial in helping the U.S. outcompete China; today, U.S. imports of manufacturing inputs from North America are more than three times the quantity imported from China.

Making “draconian changes” to the Securities and Exchange Commission’s regulatory approach to non-U.S. companies could result in reduced foreign investment in U.S. manufacturing, among other negative repercussions, the NAM told the agency this week.

What’s going on: The NAM has urged the SEC to “proceed cautiously” in considering changes to the definition of “foreign private issuer,” which are foreign-owned companies with shares that trade on American stock exchanges.

• FPIs have raised capital from U.S. investors and invested billions of dollars to expand their U.S. manufacturing operations, a trend that is expected to continue during the second Trump administration.
• The SEC exempts FPIs from many of the disclosure requirements that apply to domestic companies because FPIs are presumed to be closely regulated in their home countries.
• However, in recent years, there has been a surge of FPIs that are headquartered in China and/or incorporated in the Cayman Islands, prompting concern among SEC officials about whether there is sufficient regulatory oversight of these companies and protection for their U.S. investors.
• The SEC is considering tightening the FPI definition, which would reduce the number of foreign firms that qualify for FPI regulatory relief. Such an action would increase compliance costs for those companies that lose their FPI status.

Why it’s important: Without the accommodations under the current definition, “it may be difficult for [FPIs] to retain their dual listings in the United States—potentially threatening their ability to access capital in the U.S. and expand their U.S. operations,” the NAM said.

• “While we share the [SEC’s] interest in protecting investors and ensuring that U.S. companies do not face undue regulatory burdens when competing with foreign firms, [overly strict adjustments] to the FPI definition … would have the unintended consequence of deterring foreign companies from raising the capital they need to expand their U.S. manufacturing operations,” the NAM told the agency, in response to an SEC call for public input on possible eligibility changes.

What should be done: The NAM outlined three alternative ways for a company to continue to qualify as an FPI:

• If it is traded on a major foreign stock exchange
• If it is based in a country with robust disclosure rules and investor protection regulations
• If its home country negotiates a Multijurisdictional Disclosure System agreement with the United States

High schools and community colleges in Colorado are increasingly offering students an alternative to a four-year degree: training programs that will prepare them for well-paying jobs in manufacturing (KUNC).

What’s going on: At CEC Early College in Denver, the Cherry Creek Innovation Campus in Centennial and other campuses, apprenticeship “programs are coming back, in part, through funding for career and technical education. In Colorado, 69 manufacturing programs operate at high schools across the state.”

• CoorsTek, a Golden, Colorado–based manufacturer of technical ceramic products, trained 18-year-old Genesis Gomez on its complex machinery—including its computer numeric control machines—during Gomez’s apprenticeship through Early College. Gomez has since graduated and is now a full-time CoorsTek employee.
• Andrew Sutliff, an 18-year-old current apprentice at CoorsTek through Cherry Creek Innovation Campus, is planning a career in manufacturing upon graduation from the program. “I would much rather do this than sit in a classroom for another four years,” he said.

Why it’s important: Though U.S. manufacturing job openings have declined slightly  since 2024, talent acquisition remains a top manufacturer concern nationwide.

• “While job openings still remain significant, even though the pace of hiring has slowed, this creates space for employers to refocus on long-term talent development … like apprenticeships and upskilling,” NAM Chief Economist Victoria Bloom told the news outlet. Bloom is also head of research at the Manufacturing Institute (the NAM’s workforce development and education affiliate).
• In July, there were 437,000 manufacturing job openings in the U.S., down from the half-million jobs averaged throughout 2024.

Check it out: For more information about apprenticeships and other job-training programs, visit the MI’s website here.

• And to learn much about the industry’s most effective workforce strategies, join the MI for its Workforce Summit Oct. 20–22 in Charlotte, North Carolina.

The consumer price index increased 0.4% last month following a 0.2% uptick in July. Over the past 12 months, the index rose 2.9% before seasonal adjustment (Bureau of Labor Statistics).

What’s behind it: A 0.4% rise in shelter prices was a significant cause of the overall increase in costs in August, despite the pace of growth in shelter prices slowing notably over the past two years. Meanwhile, the food index edged up 0.5%, while energy grew 0.7% due to a 1.9% jump in gasoline prices.

• Excluding the always-volatile food and energy prices, consumer prices advanced 0.3% in August.

Year in review: The 2.9% year-over-year increase in August follows a 2.7% yearly gain in July.

• Meanwhile, prices excluding food and energy grew 3.1% over the year ending in August.
• Over that time period, energy prices ticked up 0.2%, but food prices climbed 3.2%.

The NAM says: “Both the headline and core inflation rate have ticked up in recent months amid an increase in core goods prices, but likely not enough to deter Federal Reserve officials from cutting their interest rate target next week, particularly since weakness in the labor market has increased notably,” said NAM Chief Economist Victoria Bloom.

In the eight months since President Trump took office, the NAM has worked closely with the administration on modernized regulations to address the regulatory burden that manufacturers are facing.

• With the industry shouldering $350 billion every year in regulatory costs, the NAM has called for dozens of regulatory reforms to support the industry’s growth.
• The administration has responded to the NAM’s advocacy, delivering manufacturing wins in the form of lifting the liquefied natural gas export ban, rescinding Securities and Exchange Commission guidance that had empowered activist investors, reconsidering the previous administration’s unworkable PM2.5 standard and more.

Now, the administration has released its Spring 2025 Unified Regulatory Agenda —which closely aligns with the NAM’s regulatory agenda and includes even more opportunities for collaboration between manufacturers and the administration.

What’s in it: The NAM has identified more than 120 opportunities for regulatory reform in the unified agenda, in policy areas ranging from labor, to energy, to finance and much more. While the NAM has been advocating for many of these changes since the beginning, the agenda also includes new chances for meaningful reform.

• The NAM is tracking all these potential victories for manufacturers, but three areas stand out as priorities, according to NAM Vice President of Domestic Policy Jake Kuhns.

Modernizing EPA rules: The EPA is finalizing reviews of several rules from the Biden administration that would have imposed substantial burdens on manufacturers: the PM2.5 NAAQS rule, the Power Plant Rule, the Good Neighbor Rule, multiple National Emission Standards for Hazardous Air Pollutants on ethylene oxide, the Toxic Substances Control Act risk evaluation framework, the Risk Management Program and the definition of “Waters of the United States.”

• Manufacturers see these Biden-era rules as unworkable and harmful to investment. The NAM will continue providing the industry’s perspectives to policymakers as they reconsider these regulations, Kuhns said.

Unlocking resources: The administration is pushing to reconcile the Interior Department’s critical minerals list and the Energy Department’s critical materials list—a goal the NAM has long supported.

• This reform could unleash manufacturers’ access to the raw materials required for the energy transition and the AI age, Kuhns noted.

Implementing tax reform: In the wake of manufacturers’ tremendous tax victory with the passage of H.R. 1, which made permanent many pro-growth tax provisions, the NAM is working closely with the administration to ensure the implementation of the law is as effective as possible for manufacturers.

• The NAM is helping to shape expedient, practical guidance that will maximize the benefits and minimize compliance burdens for manufacturers, Kuhns added.
• The tax law created a new deduction for manufacturing production facilities—a key implementation priority for the NAM.

The NAM says: “The breadth of the agenda—and its alignment with manufacturers’ policy priorities—creates real potential for transformative regulatory reform, and it’s clear the administration is hearing us,” said Kuhns. “The NAM will continue engaging agencies, convening member input and holding Washington accountable for practical, pro-growth outcomes.”

The politicization of the proxy process has harmed manufacturers and must be addressed, the NAM told the House Committee on Financial Services on Tuesday.

What’s going on: “When manufacturers offer their shares to the public, it allows everyday Americans to participate in the industry’s success, largely through passive investments like mutual funds, pension plans and 401(k) accounts,” the NAM told lawmakers before a Wednesday hearing.

• But in recent years, shareholder activists, with the support of proxy advisors, have increasingly hijacked the proxy ballot process to advance political and social agendas that have little to do with a company’s business.
• These activist proposals force publicly traded manufacturers to take positions on contentious political issues and drive up costs for companies and other investors. Each shareholder proposal “can impose direct costs in excess of $150,000,” the NAM noted.

More problems: Proxy advisory firms, which provide institutional investors with research and voting recommendations, are not subject to any meaningful oversight by the Securities and Exchange Commission.

• What’s more, two firms—Institutional Shareholder Services and Glass Lewis—control 97% of the U.S. proxy advice market and frequently have “significant conflicts of interest” when issuing their voting recommendations, the NAM said.
• Further, these firms’ proxy research reports often include errors and misleading statements.

The background: Following years of NAM advocacy, the SEC finalized a rule in July 2020 to rein in proxy firms and require them to notify their clients if companies had responses to their research reports.

• But the following year, after a change in presidential administrations, the SEC refused to enforce that rule and then gutted most of the reforms in the 2020 rule.
• This past July, the U.S. Court of Appeals for the D.C. Circuit ruled in a lawsuit brought by ISS that the SEC lacks the authority to regulate proxy advice.

What now? “Following the D.C. Circuit’s decision, it has become even more imperative for Congress to act to pass legislation that reaffirms the SEC’s authority to regulate proxy advice under the Exchange Act,” the NAM said.

• The NAM urged lawmakers to support SEC rulemaking that prohibits proxy firms from offering consulting services tainted by conflicts of interest and provide all American public companies covered by their research “with a reasonable opportunity” to review their draft reports.
• The NAM also encouraged lawmakers to support rulemaking to modernize Rule 14a-8 by increasing the outdated $2,000 ownership requirement, updating the resubmission thresholds to exclude proposals rejected by investors and allowing companies to exclude activist proposals that raise environmental, social and political topics that are not material.

The final say: The NAM thanked Chairman French Hill (R-AR) for holding the hearing on shareholder proposals and proxy firms. “We agree that the proxy process has been increasingly co-opted by activist investors who are pushing narrow political, social or personal agendas that harm manufacturers and Main Street investors,” the NAM posted on X on Wednesday.  ​​​​​

Data centers and factories are increasingly vying for talent as older manufacturing-sector workers retire and younger people prioritize college (CBS News).

What’s going on: “Roughly 400,000 skilled trade jobs are unfilled in America, according to the Bureau of Labor Statistics. By 2033, it’s estimated that number could hit close to 2 million, according to Deloitte and the Manufacturing Institute,” CBS points out.

• Data centers—whose growth has been turbocharged by the rise of artificial intelligence applications—require round-the-clock technical support, and the sector is having trouble finding enough workers.

Good jobs: In skilled trade positions, workers have “insurance, they got health care, they got a pension,” one electrician told the news source.

• In Chicago, an experienced HVAC technician can earn more than $150,000 a year.

The MI says: “The U.S. economy needs far more apprenticeship programs and similar training options to attract young people to jobs in manufacturing and related careers. The demand from data centers underscores the importance that these hands-on skills will have in the AI-enabled economy of the future—AI will not replace humans; it will enhance and even expand the labor force,” said MI Chief Program Officer Gardner Carrick.

• “The MI’s many offerings—including FAME USA, the apprenticeship-style training program founded by Toyota and now run by the MI—are leading the way in helping manufacturers and partner industries head into this future with the well-trained, well-paid workforce they need.”