August Small Business Pulse

July 31, 2026

What we're seeing

• Profitability ascends in July: Our proxy for business profitability continued trending higher in July, pointing to a sustained improvement in the financial health of small businesses.
• Payroll growth remains steady: The net share of businesses expanding payrolls year-over-year remained essentially unchanged from June (18%), and median payroll growth came in at 5%. Despite accelerating through April, payroll growth appears to have stabilized, consistent with the national jobs numbers that point to a labor market that's losing steam.
• Small businesses are using AI: AI is now common in small business workflows, most often supporting marketing and research tasks. Owners see clear upside for efficiency and competitiveness, but privacy and security concerns and limited trust potentially slow deeper use. Paid usage is lower than overall self-reported usage, suggesting a potential reliance on free/bundled tools and mostly small-scale spend.