The index of small business optimism from the National Federation of Independent Business (NFIB) fell 2.4% last month and reversed much of October's improvement.

The decline was due to fewer (11%) firms expecting the economy to improve. Plans for adding to employment fell to 13% from the high 17% of the last three months but the number of firms with job openings increased to the cycle's high of 24%. The percentage of firms planning to raise capital expenditures surged to 34%, the highest since March.

During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.

The percentage of firms planning to raise average selling prices rebounded to 33%, the highest level in over twenty years. The percentage of firms actually raising prices also rose. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.

About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

The latest press release from the NFIB is available here.