Small Business Optimism Declines Slightly in March

The National Federation of Independent Business (NFIB)’s Small Business Optimism Index decreased 0.8 points in March to 90.1, marking the 15th consecutive month below the 49-year average of 98. Twenty-four percent of owners reported inflation as their single most important business problem, down four points from last month. Small business owners expecting better business conditions over the next six months remain at a net negative 47 percent.

“Small business owners are cynical about future economic conditions,” said Bill Dunkelberg, chief economist for NFIB. “Hiring plans fell to their lowest level since May 2020, but strong consumer spending has kept Main Street alive and supported strong labor demand.”

Key findings include:

  • Forty-three percent of owners reported job openings that were hard to fill, down four points from February and remaining historically very high.
  • The net percent of owners raising average selling prices decreased one point to a net 37 percent seasonally adjusted.
  • The net percent of owners who expect real sales to be higher deteriorated six points from February to a net negative 15 percent.

As reported in NFIB’s monthly jobs report, a seasonally adjusted net 15 percent of owners are planning to create new jobs in the next three months. Twenty-six percent of owners reported few qualified applicants for their open positions and 27 percent reported none. Eleven percent of owners cited labor costs as their top business problem and 23 percent said that labor quality was their top business problem. Labor quality remains in second place behind inflation by one point as the top business problem.

A net negative 6 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months. Sales are trending down. The net percent of owners expecting higher real sales volumes deteriorated six points to a net negative 15 percent.

Nineteen percent of owners reported that supply chain disruptions still have a significant impact on their business. Another 31 percent reported a moderate impact and 35 percent reported a mild impact.

Seasonally adjusted, a net 42 percent reported raising compensation, down six points from February. A net 22 percent plan to raise compensation in the next three months.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in March 2023.

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