Small-Business Optimism Index Slips

By Kathleen Madigan After four consecutive gains, the National Federation of Independent Business index of small-business optimism fell back in December.The NFIB’s index slipped 0.6 point to 92.6 last month.“Apparently, the ‘management change’ in Washington and marginally better retail-sales numbers weren’t enough to pump up spirits at the New Year celebrations,” the NFIB said.A big drag came from the subindex of expected business conditions in six months. It fell seven percentage points to 9%. In addition, the subindex on earnings trends fell four points to -34%.Even so, small-business owners expect an improvement in demand, with the expected sales index up two percentage points to 8%.Hiring also made gains. The December employment subindex increased two points to 6%. For those firms that are hiring, the subindex covering job openings that are hard to fill rose four points to 13%.“The reduction in the payroll tax will add some impetus to hiring as most of that addition to take-home pay will be spent,” the report said.Inflation pressures from small businesses remain low. Seasonally adjusted, the net percentage of owners raising prices stood at -5% in December, a one-point drop from November.Even so, the report said the “trend is clearly supportive of higher prices in future months.” Plans to raise prices rose two points to a seasonally adjusted net reading of 15% of owners, the highest rate in more than two years.