July 31, 2026

What we're seeing

• Profitability edges up in June: Our proxy for business profitability continued trending higher in June after a slight moderation in May, pointing to a continued gradual improvement in the financial health of small businesses.
• Payroll growth picks up slightly: After May's pullback, the net share of businesses expanding payrolls year-over-year ticked up to 24% and median payroll growth came in at 6%. Both metrics are roughly in line with year-ago levels, suggesting hiring and wage growth remain steady but not accelerating.
• Cost pressures remain front and center: With more owners expecting higher prices and expenses ahead, many are moving quickly to defend margins. Small businesses are responding with pricing and fee adjustments, tighter spending and supplier changes, and operational tweaks to staffing and hours. When those steps don’t fully close the gap, owners are more likely to lean on liquidity and postpone investments.