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The NFIB Small Business Optimism Index ticked up 1.7 points to 100.3 in July, remaining above the 51-year average of 98. July’s increase stemmed primarily from an improvement in business conditions and reports that it was a good time to expand. Of the 10 components included in the index, six increased, two decreased and two stayed the same. Meanwhile, the Uncertainty Index rose eight points to 97, indicating a notable worsening of small business uncertainty and remaining 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 in July, with 21% reporting it as the most important problem, up five points from June. On the other hand, fewer small business owners reported jobs they could not fill in July, down three points from June to 33%. Following the passage of the tax bill, taxes fell in the rankings of top small business concerns in July to second after being the top concern in June, with 17% reporting them as their most important problem, down two points from the month prior. Inflation and poor sales tied for third in the list of concerns, with 11% reporting it as a top concern.

A net 27% of small business owners reported raising compensation, down six points in July after jumping seven points in June. Meanwhile, just 17% of small business owners plan to increase compensation in the next three months, down two points from June. The cost of labor on inflation is easing, but profitability remains under pressure, with a net negative 22% reporting positive profit trends, the same percentage as in June. Of those reporting lower profits, 34% claimed weaker sales, 13% cited increased material costs and 11% claimed labor costs. A net 24% of small business owners planned price hikes in July, down five points from June but remaining above the average of net 13%. Meanwhile, 4% reported their last loan was harder to get than previous attempts, down one point from June, and a net 5% of owners reported paying a higher rate on their most recent loan, down four points from the prior month.

The outlook for general business conditions soared fourteen points to 36%, a very positive reading by historical standards. Additionally, the share of firms saying it is a good time to expand rose five points to 16% in July. With the Uncertainty Index at elevated levels, tariffs, inflation and geopolitical tensions all remain sources of doubt influencing hiring, pricing and investment decisions. Small businesses are hopeful that the next six months will provide some clarity to these issues, which would provide an incentive to invest.

U.S. import prices increased 0.4% in July, after slipping 0.1% in June, with both higher nonfuel and fuel prices driving the increase. Over the past year, import prices decreased 0.2%. Meanwhile, U.S. export prices ticked up 0.1% in July, with nonagricultural export prices driving the increase. Over the past year, export prices increased 2.2%.

In July, U.S. import prices for manufacturing rose just 0.2% over the year, but with significant divergences in prices across the industry. Petroleum and coal products manufacturing experienced the most significant over-the-year U.S. import price declines in July, falling 12.9%. On the other hand, the greatest yearly increase in U.S. import prices occurred in primary metal manufacturing, which rose 10.0% from July 2024. Meanwhile, U.S. export prices for manufacturing in July increased 2.8% over the year, with primary metal manufacturing export prices exhibiting the largest rise (26.3%).

Fuel import prices rose 2.7% over the month in July, following a 0.8% increase in June and a 5.0% decline in May. Higher prices for petroleum and natural gas drove the increase, rising 2.4% and 4.7%, respectively. Despite the over-the-month increase, prices for fuel imports plummeted 12.1% from July 2024. Import prices for petroleum fell 13.7% from last year. Meanwhile, natural gas prices jumped 62.2% over the year.

Nonfuel import prices increased 0.3% in July, following a 0.3% decrease in June. Higher prices for nonfuel industrial supplies and materials, consumer goods and capital goods more than offset lower prices for automotive vehicles and foods, feeds and beverages. The price index for nonfuel imports grew 0.9% over the past year and has not declined on a year-over-year basis since February 2024.

After rising 0.8% in June, agricultural export prices stayed the same in July. Over the past 12 months, agricultural export prices increased 3.4%. Meanwhile, nonagricultural export prices inched up 0.1% in July. Higher prices for capital goods, consumer goods and automotive vehicles more than offset lower prices for nonagricultural industrial supplies and materials. Over the past year, nonagricultural export prices advanced 2.0%.

Manufacturing activity in New York state grew modestly in August. The headline general business activity index strengthened from July, rising 6.4 points to 11.9. Meanwhile, the new orders and shipments indexes also increased, to 15.4 from -2.0 and 12.2 from 11.5, respectively. Unfilled orders improved slightly but remained negative, rising from -6.4 to -5.5, while delivery times lengthened from 8.3 to 17.4. Inventories declined notably, plunging from 15.6 to -6.4, but supply availability improved, rising from -11.0 to -5.5.

The index for the number of employees declined from 9.2 to 4.4, while the average employee workweek was relatively unchanged at 0.2. Input prices fell from 56.0 to 54.1, while selling prices also moderated slightly, edging down 2.8 to 22.9 points, a reflection of a slower pace of increase for prices received and prices paid.

Looking forward, firms’ expectations worsened but remained positive. The index for future business activity decreased 8.1 points to 16.0. In the next six months, new orders and shipments are still expected to increase, but at a slightly slower pace than anticipated last month, clocking in at 16.3 and 17.9, respectively. On the other hand, capital spending plans returned to negative territory, falling 10.1 points to -0.9.

Employment expectations remained but declined from 11.0 to 6.9, while the average employee workweek outlook strengthened, rising from -0.9 to 0. Input prices are expected to climb higher, rising from 58.7 to 64.2. On the other hand, selling price expectations ticked down 0.9 points to 41.3. Meanwhile, supply availability is still forecasted to contract in the next six months but at a slower pace than predicted in July.

Industrial production edged down 0.1% in July, while manufacturing output stayed the same as June. At 100.2% of its 2017 average, manufacturing production in July rose 1.4% from the same month last year. Capacity utilization for manufacturing dipped to 76.8%, down 0.1 percentage points from June but increased 1.2% over the past year. Capacity remains 1.4 percentage points below its long-term average from 1972 to 2024.

In July, major market groups posted mixed results. Consumer goods production increased 0.1%, while business equipment output rose 0.5%. Among consumer goods, the production of automotive products advanced 0.7%, while the index for appliances, furniture and carpeting decreased 1.5%. Among business equipment, the gain was supported by a 1.8% and 0.3% rise in the index for transit equipment and industrial and other equipment, respectively. On the other hand, the indexes for nonindustrial supplies and materials both declined 0.3%, led by a 2.0% decline in textile materials in July.

Durable goods manufacturing rose 0.3% in July and 2.7% from the year prior. Monthly growth was greatest for aerospace and miscellaneous transportation equipment (1.7%), while primary metals, machinery and motor vehicles and parts posted the largest declines at 0.3% each. Meanwhile, led by a 2.1% drop in textile and product mills output, nondurable goods manufacturing decreased 0.4% in July but rose 0.6% from July 2024.

The Producer Price Index for final demand (also known as wholesale prices) surged 0.9% over the month in July, the largest monthly jump since March 2022, after prices stayed the same in June. Over the year, producer prices moved up 3.3% in July, up from the 2.4% hike in June. Meanwhile, prices for final demand excluding foods, energy and trade services increased 0.6% over the month in July, after staying the same in June. Prices for these goods advanced 2.8% from July 2024.

Within final demand, prices for services advanced 1.1% in July, accounting for more than three-quarters of the headline increase. Meanwhile, prices for goods rose 0.7%. Over half of the increase in prices for services is attributed to a 2.0% rise in margins for trade services, indicating companies are absorbing a smaller percentage of those higher costs. Meanwhile, 40% of the increase in goods arose from the 1.4% gain in foods. Within the final demand goods index, prices for industrial material handling equipment climbed 0.6% over the month and 6.0% from July 2024. In addition, prices for private capital equipment for manufacturing industries jumped 4.4% over the year, the largest yearly increase since September 2023.

Processed goods for intermediate demand rose 0.8% in July, the largest rate of increase since January. Over half of the rise can be attributed to an 11.8% gain in the diesel fuel index. Meanwhile, the index for processed foods and feeds fell 0.1%. Over the year, the index grew 2.1%, the largest 12-month increase since the 2.1% rise in February 2023.

Meanwhile, prices for unprocessed goods for intermediate demand advanced 1.8% in July, after rising 2.6% in June. Nearly two-thirds of the July gain can be traced to a 2.9% hike in the prices for unprocessed foodstuffs and feedstuffs. Additionally, prices for unprocessed nonfood materials less energy rose 2.0

In July, consumer prices increased 0.2% over the month and 2.7% over the year, the same as the annual rise in June. 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 2.9% 12-month increase in the month prior.

Energy costs fell 1.1% over the month in July, after rising 0.9% in June, and declined 1.6% over the year. Within the energy index, gasoline prices plunged 2.2% from June, after increasing 1.0% the month prior, and declined 9.5% from July 2024. Meanwhile, electricity and utility (piped) gas prices dipped 0.1% and 0.9%, respectively, over the month, but surged 5.5% and 13.8% over the year.

In July, food prices stayed the same as June, with prices for food at home edging down 0.1%. On the other hand, food prices rose 2.9% over the year, with food at home advancing 2.2%. Meanwhile, prices for food away from home climbed 0.3% from June and 3.9% from July 2024. The indexes for major grocery store food groups were mixed, with two increasing, three decreasing and one staying the same.

The shelter index grew 0.2% over the month and 3.7% over the year, dipping slightly from the 3.8% 12-month increase in June. Meanwhile, prices for transportation services soared 0.8% over the month and 3.5% over the year, with airline fares leading the monthly increase, rising 4.0% from June. Motor vehicle maintenance and repair led the over the year increase, surging 6.5% from July 2024.

Both the headline inflation rate and core inflation rate have ticked up slightly from last year in recent months, but likely not enough to deter Federal Reserve officials from cutting their interest rate target later this year, particularly since weakness in the labor market has increased in recent months. Therefore, markets anticipate that the Federal Open Market Committee will lower its interest rate target by 25 basis points at its meeting next month.

New orders for manufactured goods declined 4.8% in June, following an 8.3% increase in May. On the other hand, new orders for manufactured goods grew 3.8% over the year. When excluding transportation, new orders inched up 0.4%. Orders for durable goods plunged 9.4%, following a 16.5% increase in May. Year to date, durable goods orders are up 7.9%. Nondurable goods orders rose 0.5% in June after ticking up 0.1% in May. Nondurable goods orders are down 0.1% over the year.

New orders for nondefense aircraft and parts, which have been incredibly volatile in recent months, led the decrease in durable goods orders, diving 51.8%, following May’s 231.6% surge. In June, the largest monthly increase occurred in industrial machinery, which jumped 6.9%, after rising 2.3% the prior two months. The largest over-the-year changes also occurred in nondefense aircraft and parts (up 175.9%) and defense search and navigation equipment (down 7.5%).

Factory shipments increased 0.5% in June, after rising 0.2% in May. Shipments over the year rose 1.0%. Shipments excluding transportation ticked up 0.4% in June, following a 0.1% rise the previous month. Shipments for durable goods improved 0.5% in June, following a 0.3% increase in May, and are up 2.2% year to date. Meanwhile, nondurable goods shipments advanced 0.5% after inching up 0.1% the prior month but are down 0.1% year to date.

Unfilled orders for all manufacturing industries rose 1.0% in June, after increasing 3.4% in May. Unfilled orders over the year jumped 7.2%. Inventories ticked up 0.2%, after inching up 0.1% the prior month, and the inventories-to-shipments ratio remained the same at 1.57. The unfilled orders-to-shipments ratio for durable goods increased to 7.03 from 6.98 in May.

Manufacturers in Pennsylvania and New Jersey welcomed Republican representatives to their facilities this week, thanking them for delivering a landmark victory for manufacturers: the passage of H.R. 1.

• House Republican Conference Chairwoman Lisa McClain (R-MI) and local Reps. Tom Kean (R-NJ-7), Rob Bresnahan (R-PA-8) and Ryan Mackenzie (R-PA-7) participated in the factory tours as part of Chairwoman McClain’s One Big Beautiful Tour.

NAM in action: NAM Executive Vice President Erin Streeter accompanied lawmakers, highlighting how the Manufacturing Law is already having positive impacts on local manufacturing.

• “Manufacturing is the backbone of the American economy—and with the leadership of Chairwoman McClain, Reps. Kean, Bresnahan, Mackenzie and their colleagues in Congress—that foundation is stronger than ever,” Streeter said following the visits.
• “By championing the Manufacturing Law, Congress has protected nearly 6 million jobs and more than $500 billion in wages for hardworking Americans. We thank them for their leadership.”

New Jersey: Chairwoman McClain and Rep. Kean toured Bihler of America , a manufacturer of precision automation systems in Phillipsburg, New Jersey. The company specializes in complex metal stamping, forming and assembly solutions, serving industries such as automotive, medical and consumer products.

• “Manufacturers thrive when we have the certainty we need to plan major investments in our facilities and our people. That’s exactly what this tax package delivers,” said Bihler CEO Maxine Nordmeyer.
• “We thank our partners in Congress and the administration—and we look forward to working with them on a full comprehensive manufacturing strategy. Through energy, trade and workforce policies that drive our competitiveness, deliver certainty and empower manufacturers, we will build on the success of the One Big Beautiful Bill.”

Pennsylvania: Rep. Bresnahan joined Chairwoman McClain for a tour of i2M , a manufacturer of flexible polymers in Mountain Top, Pennsylvania. The company produces custom polymer films and sheets used in a variety of applications, including agriculture, construction, packaging and geomembranes.

• “Manufacturers are innovators. By restoring immediate R&D expensing for manufacturers across America [a key provision of the OBBBA], Congress has empowered manufacturers like i2M to innovate and create,” said i2M Founder Chris Hackett.
• “That’s how we keep our competitive edge—not just as a company, but as a country.”

Pennsylvania, round 2: At another stop in the Keystone State, Rep. Mackenzie joined the tour at U.S. Metal Powders in Palmerton. The visit highlighted the company’s recent expansion, including a new state-of-the-art production line that will create new jobs and boost aluminum powder output for global markets.

• “Thanks to this transformative tax legislation, U.S. Metal Powders has already broken ground on adding another production line—which will soon double the company’s workforce. This is pro-growth tax policy in action,” Pennsylvania Manufacturers’ Association President and CEO David N. Taylor said in response to the visit.

NAM in the news: The White House’s rapid response account on X highlighted Rep. Bresnahan’s visit to Pennsylvania and appearance on the area’s local Fox affiliate.

• Fox Business Network’s Maria Bartiromo cited the NAM’s partnership on the tour in an interview with Chairwoman McClain.
• The House GOP X account shared a video of Streeter talking about the facility visits.
• Chairwoman McClain posted about her visits to Bihler of America, i2M and U.S. Metal Powders on X. Chairwoman McClain, along with Reps. Bresnahan and Kean, also amplified the NAM’s own social posts.
• WVIA covered the visit to i2M.

The U.S. is making huge strides in the medical and biopharmaceutical fields, but price controls threaten this progress, a recent Wall Street Journal editorial asserts (subscription).

What’s going on: “President Trump … last week threatened drug companies with price controls or worse if they don’t cut prices as he wants,” the editorial board wrote. “Mr. Trump’s excuse is that other countries are ‘free riding’ on American innovation. His solution: Demand manufacturers give Americans their “most-favored nation” (MFN) price—i.e., the lowest in other developed countries like Canada and the U.K. If drug makers refuse, he may yank their drug approvals, harass them with lawsuits and more.”

Why it’s a problem: While nations with single-payer health care systems, such as Canada and the U.K., pay less for prescription pharmaceuticals than American private insurers and Medicaid, “[d]rugs aren’t the main driver of health care premiums, patient costs or government spending.”

• “Manufacturers benefit for a few years from patent protection after medicines launch, but then they face stiff competition from follow-on medicines and generics.”
• Unbranded generic medications account for 90% of all prescriptions in the U.S. and cost just one-third less here than they do in other countries.

What really works: Market competition, not price controls, is what will bring costs down for consumers, the editorial continues.

Discouraging innovation: It isn’t true that pharmaceutical manufacturers get “generous research subsidies,” as the president recently claimed.

• In fact, “the pharmaceutical industry spent $141 billion on research and development in 2022, nearly 40 times as much as the National Institutes of Health did on research directly related to drug development.”
• Harassing companies the way Trump is doing, according to the piece, could make them move more of their intellectual property to China—and that’s a move that would “likely result in fewer new drugs developed and sold in the U.S., especially in riskier research fields like neurologic and rare genetic diseases.”

NAM says: “European-style price controls will stifle innovation—undermining R&D and limiting future access to breakthrough treatments,” NAM President and CEO Jay Timmons said in a statement last week.

• “Manufacturers and manufacturing workers are facing rising health care costs because of underregulated middlemen like [pharmacy benefit managers] and the 340B program, both of which have increased prices for patients without producing a single treatment. Rather than punishing the innovators who develop lifesaving and life-changing medicines, policymakers should focus on the real inefficiencies and distortions in the system.”

The Environmental Protection Agency’s move to repeal the previous administration’s 2024 Power Plant Rule is a positive one for manufacturing in the U.S.—but to truly unleash American energy’s potential, we need permitting reform, too, the NAM told the EPA this week.

What’s going on: In June, the EPA proposed a rule to repeal the previous administration’s 2024 greenhouse gas emissions regulations for certain traditional power plants.

• “Manufacturers commend the EPA for acknowledging the unworkability of the previous administration’s rule,” NAM Vice President of Domestic Policy Chris Phalen told EPA Administrator Lee Zeldin on Tuesday.
• Repeal of the 2024 rule is a crucial start in getting “as much electricity generation online as possible,” Phalen continued. “But without comprehensive permitting reform to enable the buildout of new and modernized plants of all types in a timely manner, including traditional generation and plants using lower emissions technologies like [carbon capture and sequestration] and hydrogen, there is a serious risk we fall short of our energy generation needs.”

Why it makes sense: The NAM laid out its primary reasons for supporting the proposed rescission, which include the following:

• The requirement that some achieve a 90% carbon capture rate was arbitrary and unfeasible given that carbon capture and sequestration technology is not yet at commercial scale.
• The plant closures that would result from the rule’s implementation would threaten grid reliability.

No relief without reform: Repealing the 2024 rule keeps many traditional plants online, which is a must as the national energy appetite grows due to data center expansion, Phalen said. Still, there are further steps we must take—and soon.

• “These include consolidating the permitting processes and putting enforceable deadlines for the siting of new energy projects and their infrastructure; speeding up the approval process for transmission, distribution and electrical generation projects; enacting commonsense guardrails on judicial review to ensure a speedy process that results in definitive decisions for all projects; and committing to developing our resources to strengthen U.S. supply chains for the energy infrastructure vital to national security.”