Small business optimism falls to an 11-year low

Summary

Small business optimism edges lower in March

The NFIB Small Business Optimism Index fell for a third consecutive month in March, ultimately dropping to its lowest level since 2012. Firms reported sharply lower sales expectations from the previous month, and a net 36% of respondents expect the economy to worsen in the next six months. Price pressures and finding quality labor were the primary issues facing small businesses in March, although inflation has muscled its way back to being the foremost concern for most small businesses. Indeed, the net percentage of small business owners raising prices jumped to 28% from 21%, the highest share since October 2023. The labor market continues to plow ahead, helped along by robust labor supply growth. Firms seem to be having an easier time finding workers as the share of firms reporting a difficult-to-fill position fell to its lowest level in just over three years. That said, hiring intentions continued to move lower in March, falling to their lowest level since October 2016—not including the initial pandemic downturn. Small business optimism will likely remain suppressed going forward as firms continue to face difficulties stemming from rising prices, a strong labor market and uncertain demand outlook.

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