Small Business Optimism Falls Back Sharply

Small business optimism index fell back sharply in January, to 93.9 from December's 95.2 and reflecting deepening pessimism over both the economic outlook and sales expectations. Plans to increase employment also came down but nevertheless remain solidly in the plus column. And two important components remain exceptionally positive, jobs hard to fill and plans to increase capital outlays with the latter pointing to future hiring and belying the negative expectations for the economy. But key negatives also include pessimism over earnings, a trend that doesn't support hiring or business investment. The details are mixed to downbeat in this report, one that falls in line with the general tenor so far of January's economic data.

Recent History Of This Indicator:
The small business optimism index has been on the climb with key components - job openings and plans to increase employment - showing solid strength. Capital investment, which is directly related to future employment, has also been positive. The Econoday consensus is calling for a slight dip to 94.9 in the January index vs 95.2 in December.