After three months of sustained growth, the March NFIB Index of Small Business Optimism ended its slow climb, declining 1.3 points and landing at 89.5. In the 44 months of economic expansion since the beginning of the recovery in July 2009, the Index has averaged 90.7, putting the March reading below the mean for this period. Of the ten Index components, two increased, two were unchanged and six declined. Among the greatest declines were labor market indicators, inventory investment plans and sales expectations.

In the March report, over three-quarters of business owners reported that they expect business conditions in six months to remain the same as they are now or worse. Aggregated, there are no plans to create new jobs in the coming months, although some parts of the U.S. will experience job growth and some sectors will create new jobs (housing and energy in particular). A near record low percentage of small-business owners claim that credit is their top business problem (three percent); the greatest business problem for 23 percent of owners is taxes and regulations and red tape for 21 percent of owners.

Capital Outlays - When it comes to business investment, owners are still in “maintenance mode.” The frequency of reported capital outlays over the past six months rose 1 point to 57 percent, rising steadily since January, though by very small amounts. The percent of owners planning capital outlays in the next three to six months was unchanged at 25 percent.

Credit Markets - Credit demands remained weak in March.  Twenty-nine percent reported all credit needs met, and 49 percent explicitly said they did not want a loan (64 percent including those who did not answer the question, presumably uninterested in borrowing as well).  Seven percent of owners surveyed reported that all their credit needs were not met, unchanged from February and 3 points above the record low.