U.S. NFIB's small business optimism declines for a third consecutive month, hits a two-year low

Data released on Tuesday showed that the NFIB's small business optimism index retreated for a third consecutive time in March, falling by 0.3 points to 92.6, hitting a two-year low. Data missed expectations which called for a modest rise to 93.5. Six of the ten sub-components fell on the month, while four saw some improvement.

"A 'chartist' looking at the data historically might conclude that the index has clearly hit a top and is flashing a recession signal. The April survey will decide whether or not the alarm should be rung," the NFIB said in statement.

While small business owners were fairly upbeat about business conditions in the next six months and their attitudes towards capital spending improved a bit, they was some softening in their views of the labor market.

Some 22% of small business owners reported raising employees’ pay in the past three months. That’s unchanged on a seasonally adjusted basis from the February total. Just 16% are planning to raise wages in the next three months, an increase of four points month over month.

"Small Business Optimism is disappointing based on today’s data, but it is not unexpected. Ongoing uncertainty over the recent market volatility and changing political climate have become constant concerns. We expect small business optimism to improve during the next several months, accompanied by continued small business growth." said Fred Graziano, head of Commercial Banking at TD Bank