The NFIB’s Small Business Optimism Index Declines for Third Consecutive Month in March 2022

The National Federation of Independent Business (NFIB), one of the largest small business associations in the U.S., reported today (4-12-22) that their NFIB Small Business Optimism Index decreased by -2.4 points to a reading of 93.2, the third consecutive month below the 48-year average of 98.

Thirty-one percent of owners reported that inflation was their single most important problem in operating their business, a five-point increase since February and the highest reading since the first quarter of 1981. Inflation has now replaced “labor quality” as the number one problem for small business owners.

Forty percent of owners report that supply chain disruptions have had a significant impact on their business, up three points. Another 28% report a moderate impact and 23% report a mild impact. Only 8% report no impact from recent supply chain disruptions.

Other highlights include the following:

1. The net percent of owners raising average selling prices increased four points to a net 72% (seasonally adjusted), the highest reading recorded in the series. Unadjusted, three percent of owners reported lower average selling prices and 71% reported higher average prices.
2. Forty-seven percent of owners reported job openings that could not be filled, a decrease of one point from February.
3. Owners expecting better business conditions over the next six months decreased -14 points to a net negative -49%, the lowest level recorded in the 48-year-old survey.
4. The net percent of owners reporting inventory increases fell five points to a net 0%. Not seasonally adjusted, 18% reported increases in stocks while 21% reported reductions.

In a statement prepared for the release of the February Index, NFIB Chief Economist Bill Dunkelberg said, “Inflation has impacted small businesses throughout the country and is now their most important business problem. With inflation, an ongoing staffing shortage, and supply chain disruptions, small business owners remain pessimistic about their future business conditions.”