By Xavier Fontdegloria

Optimism among small-business owners in the U.S. continued to rise in March on the back of the passage of the American Rescue Plan and the easing of Covid-19 restrictions in many states.

The NFIB Small Business Optimism Index came in at 98.2 in March, up 2.4 points from the previous month, data from a survey compiled by the National Federation of Independent Business showed Tuesday.

The reading, which is in line with the 98.5 expected by economists polled by The Wall Street Journal, is the first return to the average historical level since last November.

March posts the second straight month of increases for the index. However, it is still below the 104.5 level registered in February 2020, before the pandemic first hit the U.S.

"Main Street is doing better as state and local restrictions are eased, but finding qualified labor is a critical issue for small businesses nationwide," NFIB Chief Economist Bill Dunkelberg said.

The NFIB is a monthly snapshot of small businesses in the U.S., which account for nearly half of private sector jobs. Economists look to the report for a read on domestic demand and to extrapolate hiring and wage trends in the broader economy.

Seven of the 10 components that form the index improved and three declined compared with the previous month.

The rise in the optimism index was driven by an improvement on sales expectations over the next three months, although the component remained at a historically low level.

The number of owners who think it is a good time to expand also increased, as well as job creation plans.

Forty-two percent of owners reported job openings that could not be filled, a record high reading. "Owners continue to have difficulty finding qualified workers to fill jobs as they compete with increased unemployment benefits and the pandemic keeping some workers out of the labor force," Mr. Dunkelberg said.

The percentage of owners who expect better business conditions over the next six months, easier credit conditions and plan inventory investment also grew, the data showed.

Earnings trends over the past three months declined four points to a net negative 15% of owners reporting higher earnings compared with the prior period. "Consumers have yet to spend their stimulus checks, most of which will probably be saved," the report said.

The number of small-business owners who plan to make capital outlays decreased by three points to 20%, and 3% of those surveyed view current inventory stocks as too low in March, down two points from February but remaining at historically high levels. "This should produce historically strong demand for additional inventories and supplies--unless the economic outlook does not support more investment," the report said.

Of owners surveyed, 24% selected the quality of labor as their top business problem, followed by taxes and government regulation.

The NFIB Uncertainty Index increased six points to 81 as respondents were most uncertain about if it is a good time to expand their business and make capital expenditures in the coming months.

"Apparently, owners remain hesitant, still navigating the health crisis and are not encouraged by the Administration's spending and tax plans," Mr. Dunkelberg said.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

April 13, 2021 06:27 ET (10:27 GMT)

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