After a period of cooling, the US labor market receives an unexpected positive signal.
Small businesses, which are often the first to respond to changes in the economy, have begun to actively plan for staff expansion.
In July20% of small business owners said they plan to hire employees in the next three months.
This is the highest level since October 2022.
The main thing is the speed of change.
The indicator immediately increased by9 percentage points per month, which was the largest improvement in the history of the NFIB index.
NFIB US Small Business Hiring Plans Index. In July 2026, the indicator showed the largest monthly increase on record. Source: NFIB, Bloomberg.
Why small business is so important
Large corporations are often slower to change hiring plans.
Small companies act faster and directly reflect the state of domestic demand.
In the United States, small businesses form a significant portion of private employment.
Therefore, an increase in hiring plans may be an early indicator that the labor market is beginning to stabilize.
The labor market may receive support
In recent months, investors have been closely monitoring employment.
Weak hiring data was one of the reasons why the market began to expect looser Fed policy.
But if small businesses actually start hiring aggressively, it could change the picture.
More jobs means:
more sustainable consumption;
higher incomes of the population;
there is less risk of a sharp economic slowdown.
But this is a difficult signal for the Fed
A strong labor market has two sides.
This is positive for the economy.
But for the Fed, too-fast employment growth could mean continued pressure on wages and inflation.
Therefore, an improving labor market will not necessarily lead to rapid reductions in rates.
The regulator will have to balance between two risks:
too weak economy - risk of recession;
Too strong a labor market - risk of inflation returning.
Main conclusion
US small business unexpectedly shows improved sentiment.
A surge in hiring plans to their highest level from 2022 could be an early signal of a recovery in the labor market.
But now the main question:
Is this the start of a new cycle of employment growth or temporary business optimism after a period of weakness?
The answer will become clear from the following job reports.
