Job creation was a bright spot in the report, with employers adding the workers at the highest average rate in a year, reflecting job gains for the fourth straight month, according to the report.
In a separate private-sector measure of job growth, ADP's figures have shown that small businesses are starting to lead the way on the job-creation front.
For the 47 percent of owners who hired or tried to hire in the last three months, 36 percent (77 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.
"Confidence in the economy is crucial for small businesses and is an essential component to growth," said House Small Business Committee Chairman Rep. Sam Graves (R-Mo.).
"However, many of the federal government policies being promoted by this administration are creating confusion rather than confidence."
Dunkelberg expressed concern that small businesses won't grow much this year, especially with a lack of concrete fiscal and budget policies coming out of Washington.
"For the sector that produces half the private GDP [gross domestic product] and employs half the private sector workforce, the fact that they are not growing, not hiring, not borrowing and not expanding like they should be, is evidence enough that uncertainty is slowing the economy,” he said.
In the March report, more than three-quarters of business owners reported that they expect business conditions in six months to remain the same as they are now or worsen.
The greatest business problem is taxes and regulations for 23 percent of firms and red tape for 21 percent.
A near record-low percentage — 3 percent — of small-business owners say that credit is their top business problem.
Sales are still struggling to pick up pace but showed some improvement, with firms reporting sales over the past three months of negative 7 percent, an improvement of 2 points and the best reading in eight months.
All told, 17 percent say weak sales are their top business problem, a one point improvement over February.
Businesses are still holding back on business investment, with capital outlays over the past six months rising 1 point to 57 percent, rising steadily since January, though by very small amounts.
Only 4 percent of owners surveyed characterized the current period as a good time to expand facilities (down 1 point), a very weak number.