WASHINGTON, Aug 11 (Reuters) - U.S. small-business sentiment increased to an 11-month high in July amid a surge in the share of owners reporting plans to boost hiring, suggesting that last month's slump in nonfarm payrolls was probably temporary.

The National Federation of Independent Business said on Tuesday its Small Business Optimism Index rose 2.4 points to 99.8 last month, the highest level since August 2025 and surpassing its 52-year average of 98.0.

The survey's uncertainty index, however, increased 2 points to 91 amid a rise in owners saying they were not sure this was a good time to expand. Owners were also uncertain about capital expenditure plans.

"Uncertainty remains high, most likely due to the status of the war with Iran," said NFIB Chief Economist Bill Dunkelberg. "A meaningful resolution will be a major plus for the economy and small business owners."

The survey's employment index rebounded 1.9 points to 102.1 following four straight monthly declines. The share of owners planning to create new jobs over the next three months jumped 9.0 points to 20%, the highest level since October 2022. Those plans could, however, run into worker shortages.

The share of owners reporting job openings they could not fill increased 4 points to 36%, the highest reading since June 2025. The unfilled positions were for both skilled and unskilled labor.

The government last week reported an unexpected decline in nonfarm payrolls in July, with big downward revisions to May and June's data. Some economists attributed the decline in payrolls to worker shortages.

The labor force has decreased by more than a million this year amid retirements and an aggressive crackdown on illegal immigration by President Donald Trump's administration. Further declines are likely as hundreds of thousands of immigrants have lost their protected status.

The NFIB survey showed labor quality or availability was small business owners' single most important problem in July, with 27% identifying that as their main issue, well above the historical average of 12%.

From construction to agriculture, labor availability dominated comments from owners. Some said "finding or having qualified skilled labor applicants is nonexistent," while others said "the labor workforce is getting slim, and it seems like quality people are getting harder to find in labor fields."

Reports of inflation as the most important problem dropped for the first time this year, with only 14% of businesses saying it was an issue, down 7 points from June.