Small Business Optimism Experiences Slight Decline in March Amid Inflation and Labor Quality Concerns

Small business optimism dips in March, with inflation & labor quality as main concerns, according to NFIB's Optimism Index report.

NFIB’s Small Business Optimism Index witnessed a decline of 0.8 points in March, resulting in a 90.1 score, remaining below the 49-year average of 98 for the 15th consecutive month.

Inflation emerged as the primary concern for 24% of small business owners, marking a four-point drop from the previous month.

The outlook for improved business conditions in the next six months stayed at a net negative of 47%.

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

Notable findings from the report include:

  1. A decrease in job openings that were difficult to fill, from 43% to 39%, which is still considered historically high.
  2. A one-point reduction in the net percentage of owners raising average selling prices, bringing the seasonally adjusted figure to 37%.
  3. A six-point decline in the net percentage of owners expecting higher real sales, resulting in a net negative of 15%.

NFIB’s monthly jobs report revealed a seasonally adjusted net 15% of owners planning to create new jobs in the upcoming three months.

Furthermore, 26% of business owners noted a lack of qualified applicants for open positions, and 27% reported no applicants at all. Labor costs emerged as the top business problem for 11% of respondents, while 23% identified labor quality as their main concern.

Inflation surpassed labor quality by one point as the top business problem.

Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and has been a member of the team for 16 years. A professional journalist with 20 years of experience in traditional media and online media, he attended Waynesburg University and is a member of the Society of Professional Journalists. He has held roles of reporter, editor and publisher, having founded his own local newspaper, the Pottsville Free Press.