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Small Business Optimism Slips In Survey

Small business owners have less confidence in the U.S. economic outlook and expect a first-quarter rise in the unemployment rate as they clamp down on plans to create jobs, according to a survey released today.

The index of Small Business Optimism slipped 3.2 points to 96.5 in December, the National Federation of Independent Business said in its monthly report.

This was the second lowest reading of the index in the past 12 months, said CNBC's Steve Liesman on "Squawk Box."

"Labor markets ended the year with strength, but it appears the first quarter performance may not be as strong," William Dunkelberg, NFIB chief economist, said in a statement.

The survey also showed a 15% drop from November in the number of owners who expect the economy to improve in the first half of 2007.

The survey showed a 9% drop in the number of business owners who plan to create jobs during the next three months, while just 19% reported unfilled jobs openings, down 3 percentage points from November and 8 points from October.

Only 10% of the owners said the availability of qualified labor was their top business problem, down 2 points from November and 5 points from October, an indication that labor market conditions may be easing, NFIB said.

While the year ended with a tight labor market and solid job creation, the NFIB expects the unemployment rate to start to rise in the first quarter of 2007.

According Liesman, small businesses account for 50% of the nation's job growth.

Last week, a Labor Department report showed U.S. job growth in December was surprisingly strong with 167,000 jobs created, painting the picture of a healthier job market.

The survey is based on 447 respondents to the December survey of a random sample of NFIB's 600,000 member firms polled through Dec. 30, 2006.