The NFIB Small Business Optimism Index fell by 3.3 points in March to 97.4, slightly below the 98-point 51-year average. The Uncertainty Index also decreased by eight points, highlighting the fluctuating economic environment for small businesses.
According to NFIB Chief Economist Bill Dunkelberg, "The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months." Dunkelberg noted that small business owners are reevaluating their sales growth expectations due to these changes.
Taxes emerged as a significant issue for small business owners, with 18% identifying it as their primary concern, the highest level since November 2021. Labor quality remains the top issue at 19%, with taxes closely following. Dunkelberg also reported a 16-point drop in the net percentage of owners expecting better business conditions, now at 21%, marking the most significant decline since December 2020.
In addition to taxes, inflation continues to be a concern, affecting 16% of business owners. This remained unchanged from February, but it dropped from being the second most pressing issue. The net percentage of owners raising selling prices decreased by six points to 26%, the most significant decline since December 2022, even though the number remains historically high.
Hiring challenges persist, with 40% of small business owners unable to fill job openings in March. Of those hiring, 87% noted a lack of qualified candidates. A net 12% plan to create new jobs in the next three months, reflecting a slight decline.
Business expenditures continue, with 59% of owners reporting capital outlays in the last six months. These expenditures included spending on equipment, vehicles, and facilities improvement or expansion.
Financing concerns are mild, with 3% of owners citing it as their primary issue. However, 28% report borrowing regularly, an increase from previous months. A net 6% found loans more difficult to obtain, marking the largest monthly rise since September 2023.
Overall, only 9% of owners consider it a good time to expand, a decrease from February. When rating business health, 11% described it as "excellent," while 53% said it was "good." The report is a snapshot of small business sentiment, underscored by ongoing uncertainties in the economic landscape.
The NFIB Research Center, conducting quarterly and monthly surveys since the 1970s, released the findings. Survey participants are selected from NFIB's membership and the data is published on the second Tuesday of each month.
