US small business sentiment declined for a third straight month in March, as concerns over the economic outlook, weak sales expectations, and persistent labor challenges weighed on confidence, according to the National Federation of Independent Business (NFIB).
The NFIB Small Business Optimism Index fell 3.3 points to 97.4, slipping below its historical average.
The third consecutive monthly decline signals a worrisome trend, Wells Fargo economists said, noting that while optimism remains above pre-election levels, confidence is clearly weakening.
The share of business owners expecting better economic conditions over the next six months dropped to 21% from 37% in February. Sales expectations also fell, with a net 3% of firms anticipating higher sales — the lowest reading since before the election.
Price pressures may persist despite a dip in the share of firms raising prices to 26%. The percentage planning to raise prices climbed to 30%, the highest in a year, suggesting inflation concerns are building, Wells Fargo said.
Labor quality remained the top concern, with 40% of firms reporting unfilled job openings. Hiring plans slipped to their lowest level since April 2024, while 38% of firms reported raising compensation.
The NFIB’s uncertainty index eased but remained elevated. Capital spending intentions were modest, and access to credit tightened slightly, while borrowing costs stayed largely unchanged.