By Xavier Fontdegloria


Confidence among owners of small businesses in the U.S. deteriorated in December to a six-month low as short-term expectations over sales and business conditions worsened at year-end.

The National Federation of Independent Business said Tuesday that its small-business optimism index fell to 89.8 in December from 91.9 in November, below the index's historical average of 98 and the lowest level since June.

Economists polled by The Wall Street Journal expected the index to increase marginally to 92.0.

"Small business owners are not optimistic about 2023 as sales and business conditions are expected to deteriorate," NFIB Chief Economist Bill Dunkelberg said. "Owners will ... do their best to deal with the fallout from all of the uncertainties in a year of slow growth and still-persistent inflation," he said.

The survey--a monthly snapshot of small businesses in the U.S., which account for nearly half of private sector jobs--showed that the deterioration in confidence was driven by declining earning trends and more pessimistic views about the economy.

More businesses in December reported lower profits mainly due to the rise in the cost of materials and weaker sales. Meanwhile, less owners expected business conditions to improve in the next six months, according to the survey.

Expectations for future sales also deteriorated, while plans to increase employment, capital outlays and inventories were broadly unchanged, the data showed.

Small-business owners reported a still tight job market, albeit there were some signs of cooling. Around 41% of owners reported job openings that were hard to fill, down three percentage points from November and the lowest reading since February 2021.

Still, the difficulty in filling open positions was particularly acute in the construction, manufacturing and transportation sectors, and the majority of those surveyed reported they were hiring or trying to hire at year-end, the NFIB said.

Inflation remained as the most important problem for small businesses in December, but the survey also showed signs of abating price pressures.

The percentage of owners raising average selling prices fell to 43% in December from 51% a month earlier, its lowest level since May 2021. Price increases were most frequent in wholesale, manufacturing and construction.


Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com


(END) Dow Jones Newswires

01-10-23 0620ET