Read our full analysis for a more in-depth look at these trends.
Small Business Checkpoint: A case of the hiring hiccups
Overall small business hiring fell for the third consecutive month in July as cost pressures and business uncertainty increased.
August 2025
Key takeaways
- According to Bank of America small business data, payments to hiring firms were down for a third consecutive month. And although more small businesses are expecting better business conditions, concerns about quality of labor as the single most important problem rose 31% month-over-month in July, according to the National Federation of Independent Business.
- Are tariffs contributing to the hiring slowdown? Overall small business profitability growth remains positive according to Bank of America data, but of the limited subset of small businesses that make direct tariff payments to Customs, such outlays have surged 170% since January. And for companies with revenues >$1M, there was a stark slowdown in hiring around "Liberation Day."
- Across sectors, construction and manufacturing payments to hiring firms were up 33% from the 2024 average in July. This is likely a tale of two policy effects: on one hand, reshoring incentives could boost hiring; on the other, restricting the supply of workers has led to labor shortages. The latter is most evident in Bank of America small business payroll payments' growth, where wage inflation is most prominent in sectors such as construction and restaurants.
Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.
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