Small business hiring plans fell to their weakest level since the early months of the pandemic, signaling a sharper pullback on Main Street even as the broader US labor market remains resilient.

The NFIB Jobs Report showed that 29% of small business owners reported job openings they could not fill in May, down five points from April and the lowest reading since May 2020. A net 9% of owners said they plan to create new jobs over the next three months, down four points from April and also the lowest since May 2020.

The decline puts hiring plans below their historical average of 11%, suggesting small businesses are becoming more cautious about adding workers. The NFIB Small Business Employment Index also slipped for a third straight month, falling to 100.3 in May from 100.4 in April.

The pullback does not mean small businesses have stopped hiring. NFIB said 55% of owners hired or tried to hire in May, up two points from April. But 46% of those owners reported few or no qualified applicants, showing that labor availability remains a constraint even as hiring demand cools.

The bigger pressure point is labor costs. NFIB said 14% of small business owners cited labor costs as their most important problem in May, up five points from April and the highest reading in the survey’s history. Compensation measures remained steady, with a net 31% of owners reporting higher pay and a net 18% planning further increases.

Broader sentiment remains fragile. The NFIB Small Business Optimism Index rose slightly to 95.9 in April, but stayed below its 52 year average of 98 for a second straight month. The group said expected business conditions fell for a fourth consecutive month, while the share of owners saying it was a good time to expand dropped to its lowest level since October 2024.

The small business data contrasts with the national jobs report, which showed US employers added 172,000 jobs in May while unemployment held at 4.3%. The Labor Department said job gains were concentrated in leisure and hospitality, local government, and health care, while financial activities declined.