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     WASHINGTON (MNI) - The following are excerpts from the National Federation
of Independent Business' monthly Small Business Optimism index published
     The NFIB Small Business Optimism Index slipped 3.2 points in January, as
owners continued hiring and investing, but expressed rising concern about future
economic growth. The 101.2 reading, the lowest since the weeks leading up to the
2016 elections, remains well above the historical average of 98, but indicates
uncertainty among small business owners due to the 35-day government shutdown
and financial market instability. The NFIB Uncertainty Index rose seven points
to 86, the fifth highest reading in the survey's 45-year history.
     "Business operations are still very strong, but small business owners'
expectations about the future are shaky," said NFIB President and CEO Juanita D.
Duggan. "One thing small businesses make clear to us is their dislike for
uncertainty, and while they are continuing to create jobs and increase
compensation at a frenetic pace, the political climate is affecting how they
view the future."
     Key takeaways from the January Index were:
     Hiring, hiring plans, and job openings remained strong. Inventory spending
and capital spending were solid. Owners expressed concerns about future sales
growth and business conditions later in the year. There was some deterioration
in conditions that would support business expansion. "Although January's index
showed some positive developments among current business conditions, the return
to divided government in Washington created an inability to agree on basic
policy measures," said NFIB Chief Economist Bill Dunkelberg. "This produced the
longest partial government shutdown in history, elevating the level of
uncertainty, which is damaging to economic activity."
     Small businesses added a net 0.33 workers per firm, the best reading since
July 2018, with 15 percent of owners increasing employment an average of 3.1
workers per firm. Sixty percent reported capital outlays, just one point below
     The net percent of owners reporting inventory increases rose four points to
a net seven percent (seasonally adjusted), matching February 2018 and the
strongest since April 2000. However, the net percent of owners viewing current
inventory stocks as "too low" lost two points, historically a favorable reading
but a little less comfortable than in 2018. The percent of owners planning to
expand inventory stocks fell seven points from exceptionally high levels to one
percent of owners.
     A net four percent of all owners (seasonally adjusted) reported higher
nominal sales in the past three months, unchanged, solid, but the lowest reading
in a year. The net percent reporting higher sales averaged two percent in 2017
but eight percent in 2018, with a peak value of 15 percent. The net percent of
owners expecting higher real sales volumes fell seven points to a net 16 percent
of owners.
     As reported in January's NFIB Jobs Report, reports of higher worker
compensation rose to the second highest level in the survey's history to a net
36 percent of all firms. In 2018, nationwide wages increased 3.2 percent. Small
business owners continue to hire at record levels, with 56 percent of owners
reported hiring or trying to hire. However, 88 percent of those owners reported
few or no qualified applicants for the positions.
     Twenty-three percent of small business owners reported the availability of
qualified labor as their top business problem compared to 15 percent citing
taxes (up two points), 12 percent citing regulations and red tape, and two
percent citing financing (down one point).
     Optimism Components:        Seas Adj Level %     Change
     PLANS TO INCREASE EMPLOYMENT      18                -5
     PLANT TO MAKE CAPITAL OUTLAYS     26                 1
     PLANS TO INCREASE INVENTORIES      1                -7
     EXPECT ECONOMY TO IMPROVE          6               -10
     EXPECT RETAIL SALES HIGHER        16                -7
     CURRENT INVENTORY                 -3                -2
     CURRENT JOB OPENINGS              35                -4
     EXPECTED CREDIT CONDITIONS        -5                 1
     NOW A GOOD TIME TO EXPAND         20                -4
     EARNINGS TRENDS                   -5                 2
--MNI Washington Bureau; tel: +1 202-371-2121; email: