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← Signal: State & Power

Small business sentiment mixed as hiring slows but revenues hold steady ahead of midterms

Confirmed1 source · Oct 18, 2026

Multiple surveys show US small businesses reporting confidence in cash flow and revenues, though employment gains have weakened and inflation remains a persistent concern.

Small business sentiment mixed as hiring slows but revenues hold steady ahead of midterms
Image via The Guardian

What happened

Recent employment and business surveys present a divided picture of small business conditions in September. The National Federation of Independent Businesses reported its Small Business Optimism Index fell slightly below its long-term average, with labor quality cited as the top concern (26% of owners) and inflation second (20%). Employment data diverged: Gusto reported 28,000 jobs added by small businesses in September, the eighth consecutive monthly gain; Paychex found hiring essentially stable at its year-to-date average; ADP reported 18,000 jobs added among one-to-19-worker establishments; but Intuit's QuickBooks data showed 7,000 jobs lost among one-to-nine-employee firms. Revenue trends were stronger, with Intuit reporting inflation-adjusted average monthly revenue increased 1.68% and growth occurring across 11 of 12 industries. The Justworks/US Chamber Small Business Index found 72% of surveyed owners comfortable with cash flow, though only 27% believe the US economy is in good health. Manufacturing and service sectors continued expansion, with the ISM Manufacturing Index marking its ninth consecutive month of growth and the service sector its 27th consecutive month.

Context

Small businesses employ roughly half the US workforce and generate approximately half of GDP, making their economic sentiment and hiring decisions significant indicators ahead of November's midterm elections. The divergence between revenue growth and hiring trends suggests businesses are maintaining sales but holding back on employment expansion amid labor quality challenges and persistent inflation concerns. The contrast between the optimism shown in some confidence surveys (72% comfortable with cash flow) and the skepticism about broader economic health (only 27% believe the economy is healthy) indicates small business owners view their own operations as viable even as they remain uncertain about macroeconomic conditions. Regional disparities are evident in Philadelphia, a heavily Democratic swing-state city, which lags other major metropolitan areas in small business creation per capita despite 92% of surveyed owners reporting their companies met or exceeded expectations as of May.

What's disputed

Employment trends for small businesses in September differ significantly across data sources: Gusto, Paychex, and ADP all report net job gains, while Intuit's QuickBooks data shows employment losses among the smallest firms (one to nine employees), suggesting either measurement methodology differences or genuine divergence between slightly larger and smallest firms.