US small business optimism falls in March 2026: NFIB survey

The seasonally-adjusted frequency of reports of positive profit trends fell by 11 points from February to negative 25 per cent, contributing the most to the optimism index’s decline.

The US National Federation of Independent Business small business optimism index fell by 3 points in March to 95.8, leaving it below its 52-year average of 98.
The seasonally-adjusted percentage of owners expecting better business conditions fell by 7 points from February to 11 per cent—the third monthly decline in a row.
Sixteen per cent of them plan to make capital outlays in the next six months.

The seasonally-adjusted net per cent of owners expecting better business conditions fell by 7 points from February to 11 per cent—the third consecutive monthly decline and the lowest level since October 2024. This was the second biggest contributor to the index’s decline.

The last time the optimism index fell below its historical average was April 2025. The uncertainty index rose by four points from February to 92, well above its historical average of 68.

“The 20-per cent 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,” he noted in an NFIB release.

The employment index fell in March to 101.6 from February’s 103.5. While the 1.9-point decline is a meaningful turn in labour market conditions, the current reading remains above both the 2025 average of 101.2 and the historical average of 100.

In March, both planned and actual labour compensation decreased month on month (MoM). A seasonally-adjusted net 33 per cent reported raising compensation—down by a point. A seasonally-adjusted net 18 per cent plan to raise compensation in the next three months—down by 4 points MoM and the lowest reading since July 2025.

Sixteen per cent (seasonally adjusted) of small business owners plan to make capital outlays in the next six months—down by two points from February and the lowest level since November 2009.

A net negative 5 per cent (seasonally-adjusted) of owners plan inventory investment in the coming months—down by three points MoM and the lowest level since May 2024.

In March, 62 per cent of small business owners reported that supply chain disruptions affected their business to some extent—up by 3 points MoM. Three per cent reported a significant impact—down by 2 points, 17 per cent reported a moderate impact—up by 3 points, 42 per cent reported a mild impact—up by 2 points, and 36 per cent reported no impact—down by 3 points.

Actual price increases picked up in March following three consecutive months of decline. The net per cent of owners raising average selling prices rose by 1 point MoM in March to a net 25 per cent (seasonally-adjusted), well above its historical average.

When asked to evaluate the overall health of their business, 13 per cent rated it as excellent (up by one point MoM), 51 per cent as good (down by four points MoM), 30 per cent as fair (up by four points MoM), and 4 per cent as poor (down by a point).

A seasonally -adjusted 32 per cent of small business owners reported job openings they could not fill in March, down by a point MoM. Unfilled job openings remain above the historical average of 24 per cent. Twenty-seven per cent had openings for skilled workers, and 12 per cent had openings for unskilled labour.

A seasonally-adjusted 12 per cent of owners plan to create new jobs in the next three months, unchanged from February and close to the average of a net 11 per cent.

Nineteen per cent of business owners reported taxes as their top problem, unchanged from February. Fifteen per cent cited labour quality as their top problem.

Fourteen per cent of owners reported that inflation was their top business problem.

Fibre2Fashion News Desk (DS)