Small business optimism is falling in key sectors, according to a quarterly survey released Tuesday that showed a downgrade in manufacturing despite President Trump’s efforts to boost U.S. production through tax cuts, deregulation and tariffs.
The National Federation of Independent Business said manufacturing was the second-most optimistic of the four industries it surveyed in October, alongside construction, retail and the service industry.
However, the trendline in manufacturing turned negative, with the optimism index for this sector declining 5.8 points versus the prior quarterly reading in July. The index is a sliding scale that goes up when businesses feel better about their prospects.
“The Index fell primarily due to a deterioration in expectations for better business conditions and real sales expectations. This marked a reversal from the improvement in better business conditions and higher real sales expectations between April and July,” the NFIB report said.
Mr. Trump made U.S. manufacturing a linchpin of his second term. His aggressive use of levies on foreign goods is supposed to make domestic industries more attractive, since their output is not subject to tariff costs. The tariffs are spurring billion-dollar investments in U.S. factories by foreign companies, and the president signed landmark legislation this year that provides tax incentives for manufacturers that establish operations in America.
Yet sudden changes to the tariff framework ushered in uncertainty this year, with some domestic producers complaining that input costs have risen for machinery and metal they obtain from overseas.
The Trump administration has pleaded for patience. It says the fruit of his tariffs, which were fully implemented over the summer, and the benefits of the GOP’s One Big Beautiful Bill will be felt over the coming months as the policies take root.
“I am very, very optimistic on 2026,” Treasury Secretary Scott Bessent said Sunday on NBC News’ “Meet the Press.” “We have set the table for a very strong, noninflationary growth economy.”
Administration officials say Democrats set them back a bit by refusing to fund the government for over a month over their Obamacare subsidy demands.
While the trendline for manufacturing was negative, the NFIB said the overall index score of manufacturing, at 101.1, is “close to the industry’s historical average.”
The NFIB said construction is doing well, making it the only sector of the four it surveyed to report higher optimism than in July.
“Construction was the only industry with an Index reading above its historical average. Higher sales expectations and hiring plans largely drove the rise in the Index,” the report said.
Mr. Trump, who built his reputation as a builder, has prodded homebuilders to get moving, plus he’s touting massive corporate investments in U.S. auto plants, drugmaking, artificial intelligence and other industries.
“The hard data paints a clear picture: capital spending is soaring, real manufacturing output is at record highs, and trillions in investments to make and hire in America are flowing in, thanks to President Trump’s tariffs and pro-growth policies,” White House spokesman Kush Desai said Tuesday. “The September jobs report even showed a robust gain of 19,000 construction jobs — indicative of how these investments are materializing to build America’s manufacturing renaissance.”
