NFIB Small Business Optimism Index Edges Lower in March

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, reported released its Small Business Optimism Index (SBOI) for March. The March SBOI declined 0.9 to a reading of 88.5, the lowest level since December 2012.

This marks the twenty-seventh consecutive month that the SBOI has been below the 49-year average of 98. The last time the Index was at or above the average was December 2021.

In March, inflation and the continued tightness in the labor market were the top concerns. Other highlights of the SBOI include the following:

• The net percentage of owners who expect real sales to be higher decreased 8 points from February to a net negative 18% (seasonally adjusted).
• 25% of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), up 2 points from February.
• Owners’ plans to fill open positions continued to slow, with a seasonally adjusted net 11% planning to create new jobs in the next three months. This is down 1 point from February and the lowest level since May 2020.
• Seasonally adjusted, a net 38% of small business owners reported raising compensation, up 3 points from February’s lowest reading since May 2021.
• The net percentage of owners raising average selling prices increased 7 points from February to a net 28%, seasonally adjusted.

Commenting on the results of the March SBOI, NFIB Chief Economist Bill Dunkelberg said:

“Small business optimism has reached the lowest level since 2012, as owners continue to manage numerous economic headwinds. Inflation has once again been reported as the top business problem on Main Street, and the labor market has only eased slightly.”