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The NFIB Small Business Optimism Index stepped down 3 points to 95.8 in March, falling below the 52-year average of 98.0. March’s decrease was due primarily to a decline in earnings trends and expected business conditions. Of the 10 components included in the index, eight decreased and two stayed the same. Meanwhile, the Uncertainty Index rose 4 points to 92, still well above the 51-year average (68) and above the average since 2016 (80).

Taxes were again cited as the top concern for small business owners, with 19% reporting them as the most important problem, unchanged from February. The share of business owners reporting labor quality as the top problem stayed the same in March at 15%, with 32% struggling to fill open jobs and 52% reported hiring or trying to hire in March. Meanwhile, inflation ranked third in the list of concerns, with 14% reporting it as their top problem, up 2 points from February, with a net 25% raising prices.

A net 33% of small business owners reported raising compensation, down 1 point in March after moving up 2 points in February. Meanwhile, 18% of business owners plan to increase compensation in the next three months, down 4 points from February and the lowest reading since July. Pressure on profitability strengthened in March, with positive profit trends falling 11 points from February to a net negative 25%. Among owners reporting lower profits, 32% blamed weaker sales, 19% mentioned usual seasonal changes, 10% cited increased material costs and 7% noted labor costs. Meanwhile, 5% reported their last loan was harder to get than previous attempts, unchanged from February, and a net negative 3% of owners cited paying a higher interest rate on their most recent loan, unchanged from the prior month.

The outlook for general business conditions fell 7 points to 11%, remaining above the historical average of 4%. Furthermore, expectations for better business conditions are down 10 points from March 2025. At the same time, 11% reported that it is a good time to expand their business, down 4 points from February and a rather weak reading compared to times of economic expansion. Overall, growth has slowed and uncertainty has risen, as small business owners anticipate worse conditions in the future.

U.S. import prices increased 0.8% in March, after rising 0.9% in February, with higher nonfuel and fuel prices driving the increase. Over the year, import prices advanced 2.1%, the largest 12-month increase since December 2024. Meanwhile, U.S. export prices climbed 1.6% in March, driven by higher prices for nonagricultural and agricultural exports. Over the past year, export prices rose 5.6%, the largest over-the-year increase since November 2022.

In March, U.S. import prices for manufacturing rose 2.8% over the year, as most of the industry experienced price increases. Primary metal manufacturing experienced the most significant over-the-year U.S. import price increase in March, surging 35.1%. On the other hand, the greatest yearly decline in U.S. import prices occurred in beverage and tobacco product manufacturing, which fell 12.1% from March 2025. Meanwhile, U.S. export prices for manufacturing in March advanced 4.9% over the year, with primary metal manufacturing export prices exhibiting the largest rise (39.1%).

Fuel import prices climbed 2.9% in March, the largest monthly rise since January 2025, after increasing 2.4% in February. Higher prices for petroleum more than offset lower prices for natural gas. Import prices for petroleum and petroleum products climbed 9.4% in March. However, prices for fuel imports fell 6.0% from March 2025. At the same time, natural gas prices plummeted 71.0% in March and 49.8% over the year.

Nonfuel import prices increased 0.6% in March, after advancing 0.8% in February. Higher prices for nonfuel industrial supplies and materials, capital goods, consumer goods and foods, feeds and beverages drove the increase. The price index grew 2.8% over the past year, the largest over-the-year gain since October 2022.

After moving up 0.9% in February, agricultural export prices rose by a similar amount in March. Over the past 12 months, agricultural exports advanced 3.4%. Meanwhile, nonagricultural exports stepped up 1.7% in March. Higher prices for nonagricultural industrial supplies and materials more than offset lower prices for capital and consumer goods. Over the past year, nonagricultural export prices climbed 5.8%.

Manufacturing activity in New York state expanded in April, with the headline business conditions index rising 11.2 points to 11.0. The new orders index increased 12.9 points to 19.3, while the shipments index soared 27.1 points to 20.2, the highest level for both indexes since 2023. Unfilled orders decreased 1.7 points to 9.1, while inventories moved down 1.8 points to 5.1, indicating business inventories are growing but at a slower pace. Delivery times shortened, ticking down 1.6 points to 12.1, and supply availability worsened, declining 6.2 points to -10.1.

Employment increased in April, with the index for the number of employees rising 4.0 points to 9.8. At the same time, the average employee workweek jumped to 13.7 from 1.9, signaling a significant increase in hours worked in April. The prices paid index rose 14.4 points to 51.0, while the prices received index edged up 0.4 points to 21.8, reflecting a faster pace of increase in both prices paid and prices received.

In April, firms’ optimism regarding the future declined but remained positive, with the future business activity index falling 11.4 points to 19.6. In the next six months, new orders are expected to rise but at a slower pace compared to the prior month at 24.8. The future employment index moved down 4.1 points to 18.1, suggesting an anticipated slower pace of employment growth over the next six months. Meanwhile, input and selling price expectations are forecasted to increase at a faster pace, rising from 43.1 to 61.6 and from 32.4 to 38.6, respectively. Furthermore, capital spending plans weakened in April, falling from 21.6 to 13.1.

In April, Philadelphia’s regional manufacturing activity expanded for the fourth consecutive month, with the index for general business activity advancing from 18.1 to 26.7. This month, 32.6% of firms reported increases in activity, while only 5.9% noted decreases. The index for new orders jumped from 8.6 to 33.0, while the shipments index climbed 11.8 points to 34.0. Meanwhile, the employment index turned negative, falling 5.9 points to -5.1, and the average employee workweek index moved up from 2.8 to 7.7.

The prices paid and prices received indexes both rose in April, increasing from 44.7 to 59.3 and from 21.2 to 33.5, respectively. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating that manufacturers have been absorbing a portion of higher costs paid.

Looking ahead, most indicators showing future expectations for growth declined but remain elevated. After falling 2.8 points in March, expectations for future business activity ticked up 0.8 points to 40.8 in April. The gain came from a decline in the proportion of firms expecting a decrease in activity (15.7%). At the same time, the proportion of firms expecting an increase in activity (56.5%) moved up in April. The future new orders index dropped from 49.6 to 45.7, while the capital expenditures index climbed from 25.8 to 35.2. The future prices paid index dipped from 53.7 to 50.2, while the future prices received index rose from 38.4 to 50.2. Additionally, the index for future employment moved down from 40.4 to 35.9.

In April, firms were asked about changes in wage rates and compensation packages as well as expectations for input and labor costs. Of those responses, 46.2% of firms indicated wage rates and compensation costs have increased over the past three months, 53.8% reported no change and no firms indicated a decrease during that time. When asked about input and labor costs, firms expect higher energy costs (up 5% to 7.5%), higher cost of health benefits (up 4% to 5%) and smaller increases in other categories. Notably, 19.2% of respondents anticipate both energy and health benefits costs to rise by more than 12.5% during 2026.

Industrial production declined 0.5% in March, while manufacturing output ticked down 0.1% after moving up 0.4% in February. At 97.3% of its 2017 average, manufacturing production advanced 0.5% from March 2025. Capacity utilization for manufacturing was 75.3%, down 0.2 percentage points from February but up 1.1% over the past year. Capacity utilization remained 2.9 percentage points below its long-term average from 1972 to 2025.

In March, production for most major market groups slowed. Consumer goods production decreased 1.0%, while business equipment output ticked down 0.3%. The contraction in consumer durables (down 1.8%) was led by the output of automotive products falling 2.8%. Meanwhile, the index for consumer nondurables moved down 0.8%, led by a drop in the index for clothing (down 1.0%). Among business equipment, the 2.2% decrease in transit equipment led the decline. At the same time, the index for materials edged down 0.6%, while the index for construction supplies rose 0.4% and the index for business supplies ticked down 0.1%.

Durable goods manufacturing fell 0.2% in March but increased 1.8% from the year prior. The largest monthly decline occurred in motor vehicles and parts (down 3.7%), while electrical equipment, appliances and components registered the largest gain (up 1.1%). Meanwhile, led by a 2.3% decrease in printing and support output, nondurable manufacturing edged down 0.1% in March and 0.6% from March 2025.

New orders for manufactured goods were virtually unchanged in February after staying the same in January. Meanwhile, new orders for manufactured goods increased 3.7% over the year. When excluding transportation, new orders rose 1.2% over the month and 1.7% year-over-year in February. Orders for durable goods declined 1.3%, following a 0.4% decrease in January. Year to date, durable goods orders jumped 8.2%. Meanwhile, nondurable goods orders grew 1.5% in February after advancing 0.5% in January. On the other hand, nondurable goods orders edged down 0.6% over the year.

In February, the largest monthly increase occurred in mining, oil field and gas field machinery, which surged 14.2% after a 7.0% gain in January. The largest decline occurred in nondefense aircraft and parts, which plummeted 28.6% after falling 1.7% the prior month. The largest over-the-year changes occurred in nondefense aircraft and parts (up 60.8%) and photographic equipment (down 15.6%).

Factory shipments rose 1.4% in February, after increasing 0.7% in January. Shipments grew 2.7% over the year. Shipments excluding transportation similarly increased 1.4% in February, following a 0.5% uptick the previous month. Shipments for durable goods similarly moved up 1.4% in February, following a 0.9% rise in January, and are up 6.2% year to date. Meanwhile, nondurable goods shipments climbed 1.5%, after advancing 0.5% the prior month, and have declined 0.6% year to date.

Unfilled orders for all manufacturing industries edged up 0.1% in February, after increasing 0.6% in January. Unfilled orders over the year jumped 11.0%. Inventories inched up 0.1% month-over-month and 0.7% year-over-year. The inventories-to-shipments ratio declined from 1.55 in January to 1.53 in February. The unfilled orders-to-shipments ratio for durable goods moved down to 6.92 in February from 6.99 in January.

In March, consumer prices increased 0.9% from February and 3.3% over the year, up from the 2.4% annual rise in February and the greatest over-the-year increase since April 2024. Core CPI, which excludes more volatile energy and food prices, rose 0.2% from February and 2.6% over the year, up slightly from the 2.5% 12-month increase the month prior.

Energy costs jumped 10.9% over the month in March, after advancing 0.6% in February. Over the year, energy costs surged 12.5%, after ticking up 0.5% year-over-year in February. Within the energy index, gasoline prices soared 21.2% in March and 18.9% over the year, while fuel oil prices climbed 30.7% month-over-month and 44.2% year-over-year. Meanwhile, electricity prices grew 0.8% in March and 4.6% from March 2025, while natural gas prices declined 0.9% over the month but were still up 6.4% over the year.

In March, food prices stayed the same over the month but increased 2.7% over the year, down from the 3.0% year-over-year advance in February. Prices for food at home edged down 0.2% from February but rose 1.9% from March 2025, while prices for food away from home moved up 0.2% month-over-month and 3.8% year-over-year. Of the different food groups, beef and veal and coffee continue to rise at the fastest pace, surging 12.1% and 18.7% over the year, respectively.

The shelter index advanced 0.3% from February and 3.0% over the year, consistent with the 3.0% annual gain in February. Meanwhile, prices for used cars and trucks fell 0.4% over the month and 3.2% over the year, while new vehicle prices ticked up 0.1% over the month and 0.5% from March 2025. Relatedly, prices for motor vehicle maintenance and repair jumped 1.3% month-over-month and 6.1% year-over-year.

The headline inflation rate is still above the Federal Reserve’s target of 2.0% and continues to creep up from its 2025 lows. Despite labor market risks persisting, Federal Reserve officials held their interest rate target steady at their January and March meetings, and markets that the Federal Open Market Committee will keep its interest rate target unchanged again at the meeting later this month as risks to the Federal Reserve’s inflation mandate rise.

In January, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 0.9% annual gain, down from the 1.1% gain in December. The 10-City Composite increased 1.7%, down from 2.0% the previous month, while the 20-City Composite rose 1.2% year-over-year, down from 1.4% in December. Among the 20 cities, New York posted the highest annual gain at 4.9%, followed by Chicago at 4.6% and Cleveland at 3.6%. Meanwhile, Tampa again posted the lowest annual return, with prices falling 2.5%.

On a month-over-month basis, the U.S. National Index and 20-City Composite both declined 0.1% before seasonal adjustment. At the same time, the 10-City Composite ticked down 0.03%. After seasonal adjustment, the U.S. National Index, 10-City and 20-City Composites all rose 0.2%. The Northeast and Midwest continued to outperform other regions as January continued the trend of weak price growth. Meanwhile, in addition to Tampa, the Sun Belt market kept declining, including Denver (down 2.1%), Phoenix (down 1.6%), Dallas (down 1.5%) and Portland (down 1.0%).

Affordability concerns showed no sign of easing as the market appeared to be neither recovering nor correcting. Before seasonal adjustment, 14 of the 20 major metro areas saw price declines in January. In areas where prices continued to rise, appreciation has slowed notably. Overall, home price growth trailed inflation, reducing home values over the past year.

Consumer confidence inched up 0.8 points in March to 91.8. Among its components, the Present Situation Index improved while the Expectations Index declined as customers’ concerns regarding the present situation eased and concerns about the future worsened.

The Present Situation Index, reflecting current business and labor market conditions, rose 4.6 points to 123.3. Meanwhile, the Expectations Index, which reflects customers’ short-term outlook for income, business and labor market conditions, decreased 1.7 points to 70.9, remaining below the recession signal threshold of 80 since February 2025.

Views of the current labor market situation were virtually unchanged, with 27.3% of consumers saying jobs were “plentiful,” up slightly from February (26.7%), while 21.5% said jobs were “hard to get,” also up slightly from February (21.0%). Looking to the future, 15.4% said they expect more jobs to be available, down from 16.0% the prior month, while 27.9% anticipate fewer jobs, up from 26.2% the previous month.

Mentions of high prices and inflation continued to top the list of topics influencing consumers’ views of the economy. At the same time, mentions of energy prices and the conflict in Iran picked up, while mentions of trade decreased meaningfully in March. Consumers’ 12-month inflation expectations jumped to their highest levels since August 2025, and the proportion of consumers expecting higher interest rates surged. At the same time, the share of consumers who believe a recession is “very likely” over the next year rose, but the small share thinking the economy is already in a recession was virtually unchanged.

Buying plans for cars, with a clear preference for used cars, rose in March, but purchasing plans for homes softened slightly. Meanwhile, consumers’ plans for buying other big-ticket items declined. At the same time, consumers’ intentions to purchase more services fell for every category in March. Despite declining, restaurants, bars and take-out remained the top planned service spending category in March. Overall, consumers’ views of their current financial situation strengthened slightly in March, while views of their future financial situation worsened.

In March, Texas factory activity expanded but at a weaker pace after improving the prior month. The production index decreased from 12.5 to 6.8, falling below the series average of 9.6. The new orders index declined 5.0 points to 6.1, while the capacity utilization index stepped down 4.6 points to 7.2. Meanwhile, the shipments index fell 8.1 points to 1.8. The Eleventh District consists of all of Texas, northern Louisiana and southern New Mexico.

Perceptions of manufacturing business conditions weakened slightly in March, with the general business activity index edging down 0.4 points to -0.2. At the same time, the company outlook index also turned negative, falling 6.6 points to -3.5. Moreover, the uncertainty index jumped 19.5 points to 26.0, rising above the series average and to its highest reading since April 2025.

Labor market indicators suggested a decline in headcounts and a virtually unchanged workweek in March, with the employment index decreasing 8.5 points to -1.0 and the hours worked index declining 5.2 points to 0.9. Nearly 15.0% of firms reported net hiring, while a larger percentage (16.0%) noted net layoffs.

Price pressures strengthened slightly, while wage pressures weakened in March. The prices paid for raw materials index inched up 1.0 point to 32.7. Meanwhile, the prices received for finished goods index ticked up 0.5 points to 18.4, both higher than the series averages. The wages and benefits index fell 6.7 points to 25.2, remaining above the series’ average of 21.0.

The outlook for future manufacturing activity weakened in March, despite the future production index improving 1.4 points to 35.7. Moreover, the future company outlook index declined 7.5 points to 18.2, while future general business activity decreased 2.1 points to 10.6, with both indexes dipping below the series’ averages.