The NFIB Small Business Optimism Index fell 3.0 points in March to 95.8, below its 52-year average of 98.0. The last time the index was below its historical average was April 2025.
The NFIB Uncertainty Index rose 4 points from February to 92, well above its historical average of 68.
“The 20 percent 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,” NFIB Chief Economist Bill Dunkelberg said. “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.”
NFIB State Director Rosemary Elebash said the survey reflects the challenges facing small businesses across Alabama.
“Our members already were dealing with rising prices. Higher oil prices are pushing costs even higher, and that is increasing the financial pressure on small businesses here and across the country,” she said.
Key findings from the national survey include:
- The frequency of reports of positive profit trends fell 11 points from February to a seasonally adjusted net negative 25 contributing the most to the Optimism Index decline.
- The net percent of owners expecting better business conditions fell 7 points from February to a seasonally adjusted net 11 percent, the third straight monthly decline and the lowest level since October 2024. This was the second-largest contributor to the index decline.
- The Employment Index fell from 103.5 in February to 101.6 in March. While the 1.9-point decline marked a meaningful shift in labor market conditions, the reading remained above both the 2025 average of 101.2 and the historical average of 100.
- In March, both planned and actual labor compensation decreased from the previous month. A seasonally adjusted net 33 percent reported raising compensation, down 1 point from February. A seasonally adjusted net 18 percent plan to raise compensation in the next three months, down 4 points from February and the lowest reading since July 2025.
- Sixteen percent, seasonally adjusted, plan to make capital outlays in the next six months, down 2 points from February and the lowest level since November 2009.
- A seasonally adjusted net negative 5 percent of owners reported higher nominal sales in the past three months, down 6 points from February and ending four straight months of improvement.
- A seasonally adjusted net negative 5 percent of owners plan inventory investment in the coming months, down 3 points from February and the lowest level since May 2024.
- In March, 62 percent of small business owners said supply chain disruptions affected their business to some extent, up 3 points from February. Three percent reported a significant impact, down 2 points; 17 percent reported a moderate impact, up 3 points; 42 percent reported a mild impact, up 2 points; and 36 percent reported no impact, down 3 points.
- Actual price increases picked up in March after three straight months of decline. The net percent of owners raising average selling prices rose 1 point from February to a seasonally adjusted net 25 percent, well above its historical average.
- Planned prices fell 4 points in March to a seasonally adjusted net 24 percent, the lowest level since July 2024.
- When asked to rate the overall health of their business, 13 percent said excellent, up 1 point; 51 percent said good, down 4 points; 30 percent said fair, up 4 points; and 4 percent said poor, down 1 point.
As NFIB reported in its monthly jobs report, the Small Business Employment Index fell 1.9 points from February to 101.6, signaling further moderation in the labor market.
A seasonally adjusted 32 percent of owners reported job openings they could not fill in March, down 1 point from February. Unfilled job openings remained above the historical average of 24 percent. Twenty-seven percent had openings for skilled workers, down 1 point, while 12 percent had openings for unskilled labor, up 2 points.
Looking ahead, a seasonally adjusted net 12 percent of owners plan to create new jobs in the next three months, unchanged from February and close to the average of a net 11 percent. Overall, 52 of owners reported hiring or trying to hire in March, down 2 points from February. Forty-five percent of owners, or 87 percent of those hiring or trying to hire, said they had few or no qualified applicants for the positions they were trying to fill, down 1 point. Twenty-two percent reported few qualified applicants, down 3 points, and 23 percent reported none, up 2 points.
Fifty-one percent of owners reported capital outlays in the last six months, down 3 points from February. Actual capital expenditure levels have fallen 9 points since the start of the year and remain below the historical average. Of those making expenditures, 36 percent spent on new equipment, 22 percent acquired vehicles and 14 percent improved or expanded facilities. Nine percent spent money on new fixtures and furniture, and 5 percent acquired new buildings or land for expansion.
The net percent of owners expecting higher real sales volumes over the next quarter fell 1 point from February to a seasonally adjusted net 7 percent.
The net percent of owners reporting inventory gains fell 3 points from February to a seasonally adjusted net negative 6 percent On an unadjusted basis, 7 percent reported increases in stocks and 16 percent reported reductions. A seasonally adjusted net negative 5 percent of owners said current inventory stocks were too low in March, down 3 points from February.
The frequency of reports of positive profit trends fell 11 points from February to a seasonally adjusted net negative 25 percent. Among owners reporting lower profits, 32 percent blamed weaker sales, 19 percent cited usual seasonal change and 11 percent cited price changes for their products or services. Ten percent cited rising material costs, 7 percent cited labor costs and 7 percent percent cited other reasons. Among owners reporting higher profits, 53 percent cited sales volume, 12 percent cited usual seasonal change, 9 percent cited labor costs and 9 percent cited price changes for their products or services.
In March, the net percent of owners expecting easier credit conditions remained at a seasonally adjusted net negative 5 percent. A net 5 percent said their last loan was harder to get than in previous attempts, unchanged from February and close to the historical average of net 6 percent. A net negative 3% said they paid a higher interest rate on their most recent loan, unchanged from February. The average interest rate paid on short-maturity loans was 7.9 percent in March, down 0.3 points from February. Twenty-four percent of owners reported borrowing regularly, down 1 point from February, a historically weak reading.
In March, 11 percent of owners, seasonally adjusted, said it was a good time to expand their business, down 4 points from February and below the historical average. It was the first decline in six months.
Nineteen percent of owners said taxes were their single most important problem, unchanged from February and the top concern. Fifteen percent cited labor quality, unchanged from February and the second-highest concern. Fourteen percent said inflation was their single most important business problem, up 2 points from February and the third-highest concern.
The NFIB Research Center has collected Small Business Economic Trends data through quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Respondents are randomly drawn from NFIB membership. NFIB releases the report on the second Tuesday of each month. This survey was conducted in March 2026.
