The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index dropped from 100.4 to 97.9 in January, retreating from its first plus 100 score since October 2006.
The survey of 800 small companies that are members of the NFIB said that sales expectations in the next six months have declined as have anticipated profits, prices, capital spending, expansion plans and business conditions. Credit conditions were unchanged. Inventory satisfaction rose slightly.
The labor market remained a bright spot, the 'job openings are hard to fill' index rose 1 to 26, the same level as in June and August last year, on a par with the best reading since June 2007. ‘Hiring plans’ fell 1 to 15 in January but is still at its highest level since August 2007.
"Job creation is the core of growth and the small business sector appears to have shifted to second gear," the NFIB said in the statement accompanying the release.
The Labor Department reported last Friday that non-farm payrolls had added 257,000 positions in January, capping a three months average of 336,000, the most robust job numbers in 17 years.
Though the 'capital spending plans 'index faded 3 to 26 in the month, it is still rated the second best opportunity to expand a business since December 2007. Similar small retreats while remaining at multi-year highs were true of the 'sales expectations', 'profits' and 'expansion' indexes.
The share of owners saying that they have increased worker compensation stayed at 25 in January which was the highest since January 2008. There was no indication that business owners were finding it necessary to raise salaries to attract or retain workers.
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