The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index declined to 101.2 during January, down for the fifth consecutive month. The index declined 3.1% m/m and it was 5.3% lower y/y.

Six percent of respondents expected the economy to improve, down from a high of 48% in January 2017. A greatly lessened 20% thought that now was a good time to expand the business. That was 34% in August of last year. A lessened 18% expected higher real sales, below 29% two years earlier.

Potential pricing power was little-changed m/m. Twenty-six percent of firms were planning to raise prices, but that remained down from November's ten-year high of 29%. Current pricing pressure eased slightly. A net 15% of firms were raising average selling prices, down m/m and below the 19% May high.

Labor market readings deteriorated m/m. The 18% of respondents planning to increase employment remained below the record 26% in August. A greatly lessened 49% were finding few or no qualified candidates for job openings, sharply lower than 54% in December.

Pressure to raise worker compensation eased. A greatly lessened 20% of firms were planning to raise compensation, but a higher 36% were doing so now. That was nearly a record.

Credit remained fairly easy to get. A lessened four percent of businesses reported difficulties in obtaining financing, near the lows for the current cycle.

The small business survey inquires about problems facing small business. The most pressing problem in January was the quality of labor. Twenty-three percent reported problems versus 18% during all of 2017. A low 15% indicated that taxes were the largest problem, down from a December 2014 high of 27%. Government requirements were worrisome to a significantly lessened 12% of respondents, below the 22% in 2015. Insurance costs/availability worried a low nine percent of respondents. Competition from large businesses fell to nine percent as the biggest problem. A greatly increased eight percent of firms reported the cost of labor as the most significant problem. Poor sales were steady m/m at a greatly reduced nine percent. Financial & interest rate problems worried only two percent of respondents. A low two percent reported inflation as the biggest problem.

Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The index is based 1986=100. The typical NFIB member employs 10 people and reports gross sales of about $500,000 a year.

The NFIB figures can be found in Haver's SURVEYS database.