In March, 19% of small business owners reported taxes as their single most important problem, while 15% cited labor quality, followed by 10% who reported labor costs.
Small Business Optimism March 2026 Key Findings
The frequency of reports of positive profit trends fell 11 points from February to a net negative 25% (seasonally adjusted), contributing the most to the Optimism Index’s decline.
The net percent of owners expecting better business conditions fell 7 points from February to a net 11% (seasonally adjusted), the third consecutive monthly decline and the lowest level since October 2024. This was the second biggest contributor to the Index’s decline.
The Employment Index fell in March from 103.5 to 101.6. While the 1.9-point decline is a meaningful turn in labor 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 labor compensation decreased from the previous month. A seasonally adjusted net 33% reported raising compensation, down 1 point from February. A seasonally adjusted net 18% 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) of small business owners 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% of all owners reported higher nominal sales in the past three months, down 6 points from February. This decline ended a string of four consecutive months of improvement.
A net negative 5% (seasonally adjusted) of owners plan inventory investment in the coming months, down 3 points from February and the lowest level since May 2024. This is in step with the decline in those expecting higher sales over the next quarter.
When asked to evaluate the overall health of their business, 13% rated it as excellent (up 1 point), 51% as good (down 4 points), 30% as fair (up 4 points), and 4% as poor (down 1 point).
