US small business optimism deteriorates more than expected
Small business sentiment in the US deteriorated more than expected in in December, according to the latest survey form the National Federation of Independent Business.
The small business optimism index fell to 102.7 from 104.7 in November, missing expectations for a reading of 104.6.
Seven out of the 10 components in the index fell, two improved and one was steady.
NFIB chief economist Bill Dunkelberg said: "Owners are aggressively moving forward with their business plans, proving that when they’re given relief from the government, they put their money where their mouth is, and they invest, hire, and increase wages.
"What really matters to small business owners are issues directly impacting their bottom lines. Currently, their biggest problem is finding qualified labour, surpassing taxes or regulations. Two years ago, Congress and the President provided real, significant tax relief to small business owners. Now owners are anxious to have their tax cuts made permanent."
Pantheon Macroeconomics economist Ian Shepherdson said: "This is surprising, given the steady upward trend in the stock market since mid-October, so we’re inclined to see it is as correction rather a sign that the trend is peaking; still less that it is about to head further down. The key stock market-sensitive components - economic and sales expectations - both rose five points. The dip in the headline index, then, was due to modest declines in an array of other components, including hiring intentions (-2 points m/m), inventory satisfaction (-5), jobs hard to fill (-5), good time to expand (-4), and earnings expectations (-6); the latter probably is capturing fears of rising wage costs.
"That said, the "labour cost is biggest problem" measure fell sharply, but it is erratic and sudden one-time spikes and drops are not unusual; we expect it to rebound."