The NFIB Small Business Optimism Index experienced a decline in March, dropping just below its 51-year average benchmark. The Index registered a 3.3-point decrease, falling to 97.4. The accompanying Uncertainty Index also showed a significant decrease, dropping eight points to 96 after February's near-record level.
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. Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them."
A notable increase in taxes as the most significant issue for small business owners was reported, rising by two points to 18%. This is the highest level seen since November 2021.
Key findings from the report are as follows: The net percentage of owners expecting improved business conditions declined significantly, falling 16 points to a net 21%. This marks the third straight month of decline and is the largest drop since December 2020. Furthermore, expectations for higher real sales volumes fell by 11 points to a net 3%.
Price adjustments also saw a shift, with the net percentage of owners raising average selling prices decreasing by six points to a net 26%. Despite this decrease, it remains a historically high level.
Job openings remain a challenge for small businesses. In March, a seasonally adjusted 40% of owners reported openings they could not fill, a rise of two points from February. Among those hiring, 87% encountered few or no qualified applicants. Plans to create new jobs in the coming three months fell by three points to a net 12%.
Concerning labor costs, they were considered the most significant problem by 11% of business owners, down by one point from the previous month and close to the peak recorded in December 2021. An increase in compensation was reported by a net 38% of owners, up by five points, while a net 19% plan further increases in the coming quarter.
The NFIB Research Center has been gathering data on Small Business Economic Trends with quarterly and monthly surveys since the late 20th century. Conducted in March, this survey's findings are released monthly on the second Tuesday.
