After six months of gains, the Small-Business Optimism Index fell by almost two points in March, settling at 92.5, according to the National Federation of Independent Business, which represents small businesses.
After a promising start to the year, nine of 10 index components dropped last month. Most notably, hiring plans and expected real sales growth each took a significant dive despite owners reporting the largest increase in new jobs per firm in a year.
“March came in like a lion, with Main Street seeing significant job growth in March, but it appears to have gone out like a lamb and with no cheer in the forward-looking labor market indicators. What could have been a trend in job growth is more likely a blip,” National Federation of Independent Business chief economist Bill Dunkelberg said in a statement.
“And what looked like the start of a recovery in profits fizzled out,” he added. “The mood of owners is subdued. They just can’t seem to shake off the uncertainties out there, and confidence that the management team in Washington can deal with them effectively is flagging. What we saw in March is painfully familiar. This was the same pattern of growth, followed by months of decline, from 2011. History appears to be repeating itself — and not in a good way.”
The percentage of owners reporting inflation as their No. 1 business problem is now at 9 percent, an increase from 6 percent in January. Reports of increases in average selling prices are rising and 21 percent of the owners plan to raise their selling prices in the coming months.