The NFIB Small Business Optimism Index fell 3.0 points in March to 95.8, leaving it below its 52-year average of 98.0. The last time the Optimism Index fell below its historical average was April 2025. The Uncertainty Index rose 4 points from February to 92, well above its historical average of 68.
“The 20% Small Business Deduction and other supportive small business tax provisions in the Working Families Tax Cut Act have had many positives for small business owners,” said NFIB Chief Economist Bill Dunkelberg. “However, the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.”
As reported in NFIB’s monthly jobs report, the NFIB Small Business Employment Index fell 1.9 points from February to 101.6. This decline is indicative of further moderation in the labor market. February’s data was discussed on a newly released episode of the NFIB Research Center’s “Small Business by the Numbers” podcast
A seasonally adjusted 32% of small business owners reported job openings they could not fill in March, down 1 point from February. Unfilled job openings remain above the historical average of 24%. Twenty-seven percent had openings for skilled workers (down 1 point), and 12% had openings for unskilled labor (up 2 points).
Looking ahead, a seasonally adjusted net 12% of owners plan to create new jobs in the next three months, unchanged from February and close to the average of a net 11%. Overall, 52% of owners reported hiring or trying to hire in March, down 2 points from February. Forty-five percent of owners (87% of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill (down 1 point). Twenty-two percent of owners reported few qualified applicants for their open positions (down 3 points), and 23% reported none (up 2 points).
In March, both planned and actual labor compensation decreased from the previous month. Despite these declines, planned and actual labor compensation levels remain above their historical averages. A seasonally adjusted net 33% reported raising compensation, down 1 point from February. A seasonally adjusted net 18% plan to raise compensation in the next three months, down 4 points from February and the lowest reading since July 2025. While both planned and actual labor compensation decreased in March, compensation levels remain above their historical average.
Fifty-one percent of owners reported capital outlays in the last six months, down 3 points from February. Actual capital expenditure levels have declined by 9 points since the beginning of this year and remain below the historical average. Of those making expenditures, 36% reported spending on new equipment, 22% acquired vehicles, and 14% improved or expanded facilities. Nine percent spent money on new fixtures and furniture and 5% acquired new buildings or land for expansion.
A seasonally adjusted net negative 5% of all owners reported higher nominal sales in the past three months, down 6 points from February. This marked the first decline following four consecutive months of improvement. The net percent of owners expecting higher real sales volumes over the next quarter fell 1 point from February to a net 7% (seasonally adjusted).
The net percent of owners reporting inventory gains fell 3 points from February to a net negative 6%, seasonally adjusted. Not seasonally adjusted, 7% reported increases in stocks and 16% reported reductions. A net negative 5% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in March, down 3 points from February. A net negative 5% (seasonally adjusted) of owners plan inventory investment in the coming months, down 3 points from February and the lowest level since May 2024.
Actual price increases picked up in March following three consecutive months of decline. The net percent of owners raising average selling prices rose 1 point from February to a net 25% (seasonally adjusted), well above its historical average.
The frequency of reports of positive profit trends fell 11 points from February to a net negative 25% (seasonally adjusted). Among owners reporting lower profits, 32% blamed weaker sales, 19% cited usual seasonal change, and 11% cited price change from their product(s) or service(s). Ten percent cited rising material costs, 7% cited labor costs, and 7% reported other reasons. For owners reporting higher profits, 53% cited sales volume, 12% cited usual seasonal change, 9% cited labor costs, and 9% cited price change from their product(s) or service(s) as the source of the gain.
In March, the net percent of owners expecting easier credit conditions remained at a net negative 5% (seasonally adjusted). A net 5% reported their last loan was harder to get than in previous attempts, unchanged from February and close to the historical average of net 6%. A net negative 3% of owners reported paying a higher interest rate on their most recent loan, unchanged from February. The average interest rate paid on short maturity loans was 7.9% in March, down 0.3 points from February. Twenty-four percent of all owners reported borrowing regularly, down 1 point from February, a historically weak reading.
In March, 11% (seasonally adjusted) reported that it is a good time to expand their business, down 4 points from February and falling below its historical average. This marked the first decline in six months.
Nineteen percent of business owners reported taxes as their single most important problem, unchanged from February and ranking as the top problem. Fifteen percent of owners cited labor quality as their single most important problem, unchanged from February and ranking as the second top issue. Fourteen percent of owners reported that inflation was their single most important business problem, up 2 points from February and ranking as the third top issue.
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 2026.
