The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index declined 1.9% (-1.6% y/y) to 102.7 during December and mostly reversed its November rise. The reading was 5.6% below the high in August 2018.

Optimism declined last month as the percentage of firms indicating that now was a good time to expand the business fell to 25% from 29%. The labor market has softened. The percentage of firms planning to increase employment declined to 19% from 21%. A lessened 50% of businesses were finding few or no qualified candidates to fill job openings, down from 57% in August. The percentage of firms planning to make capital outlays also backed away from its November high. A weakened 28% planned to make capital outlays, reversing two months of increase.

Offsetting these declines, an improved 16% of respondents expected the economy to improve, the most since July, but it remained below the 48% high in January 2017. A slightly higher 16% of firms expected higher real sales, still significantly below the November 2017 high of 34%.

A slightly lessened 24% of firms planned to raise worker earnings, but that remained up from 22% in October. A reduced 29% of firms raised worker compensation, down from the August 2018 high of 37%.

Current pricing improved, as 14% of firms were raising prices now, the most in five months but below the 19% in May of last year. A lessened 20% of firms were planning to raise average selling prices.

Credit remained easy to get. Only three percent of firms reported trouble obtaining financing. Sixteen percent of firms reported difficulty near the end of the recession in 2009. A steady three percent of firms were not satisfied that their borrowing needs were met in the last three months.

The small business survey inquires about additional issues facing small business. A lessened 23% reported a problem with the quality of labor but a higher 17% indicated that taxes were the largest problem. Government requirements were worrisome by an increased 15% of respondents. That remained below the September 2013 high of 24%. A sharply lower seven percent of firms reported the cost of labor as the most significant problem, down from the record 11% in August. Competition from large businesses was felt by a sharply higher 11% of businesses as the biggest problem. Insurance cost/availability concerned a low 10% of respondents. Poor sales were the biggest problem for a greatly reduced six percent of businesses, down from 32% in 2009. Financial & interest rate problems worried just two percent of respondents. Inflation concerned a lessened one percent of respondents 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.