U.S. News

Small Business Start Year With Greater Optimism, Survey Shows


Owners of small U.S. businesses started the new year with greater optimism, a survey showed Tuesday, with nearly a quarter saying they planned to add jobs during the first three months of 2007.

The National Federation of Independent Businesses said its index of small-business optimism jumped 2.4 points to 98.9 in January, with a rebound in demand for labor boding well for
employment growth.

"Overall job creation should continue to be reasonably strong, assuming owners can find a few qualified applicants or that higher wage offers convince some individuals to re-enter
the labor force," William Dunkelberg, NFIB chief economist, said in a statement.

During the next three months, 23% of the owners polled plan to create new jobs, while only 5% plan to cut staff, the report said.

Small businesses create the majority of jobs in the U.S. economy, according to the Small Business Administration.

Price pressures for small businesses peaked last April when 26% of the firms polled raised average selling prices.

That measure dropped to just 12% in January, the lowest reading since 2003, the NFIB said.

Dunkelberg said more progress is needed to get the core inflation rate under 2%, but said there is not much further to go.

The so-called core personal consumption expenditures price index was unchanged at 2.2% rate in December from November and just above the top of the range many Federal
Reserve officials have identified as their "comfort zone."

At its last meeting on Jan. 30-31, the Federal Reserve's policy-making Federal Open Market Committee held the federal funds rate steady at 5.25%, marking the fifth straight meeting at which the FOMC left the overnight rate unchanged.

Fed Chairman Ben Bernanke delivers the central bank's semiannual report on monetary policy and the economy in two days of congressional testimony on Feb. 14-15.

The small business survey results are based on 1,755 respondents to the January survey of a random sample of NFIB's 600,000 member firms polled through Jan. 31