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Small-Business Optimism Fades

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Rising labor costs and slower growth had small-business owners feeling more pessimistic about the economy in April, according to a national report released Tuesday.

Based on a survey of more than 1,500 owners, the National Federation of Independent Business's monthly small-business optimism index fell 0.5 points to 96.8, the third straight month of declines, the Washington-based lobby said.

Three out of 10 index components declined last month, including plans to increase capital outlays, earnings trends, and expectation for the economy. Plans to increase inventories, sales expectations, job openings, and the outlook for expanding operations remained unchanged from the previous month.

Despite the weaker outlook, more owners in April anticipated increasing employment in the months ahead. While 26 percent reported higher labor costs, only 18 said they were passing those costs on to customers, the survey found.

"The percent raising compensation dropped from the cycle high of 30 percent reached in February, and the percent raising prices has increased, lessening the impact on profits, but not helping the inflation situation," William Dunkelberg, the group's chief economist, said in a statement.

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Last updated: May 8, 2007




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