The NFIB optimism index fell 1.1 points in August to 98.7, signaling weaker sentiment among U.S. small businesses even though the reading stayed above its long-term average.
Weak sales, rising inflation concerns and fading expectations for better business conditions kept uncertainty elevated and drove the monthly decline.
Hiring plans softened alongside that drop in confidence, with 17% of owners planning to add jobs over the next three months, down 3 points from July.
The August pullback suggests smaller firms are growing more cautious on demand and costs, a combination that could restrain hiring and investment if it persists.