Small-business owners were less optimistic about the economy last month despite reporting their best job creation plans since 2007, according to a leading private survey released Tuesday.
The optimism index from the National Federation of Independent Business fell 1.6 points in June to 95, the first drop in four months. Driving the decline was a steep fall-off in the outlook for general business conditions six months from now.
The net difference between the percentage of owners who expected conditions to get better and those who expected conditions to get worse was negative 10% in June. The figure was zero the previous month, meaning small-business owners were evenly split on the question then but now more have a negative view.
Six of the survey's 10 categories showed declines from the previous month, including sales expectations as well as plans for capital spending and inventory expansion.
Just two categories rose in June, both involving the labor market. The other two categories were flat.
The net percentage of small-business owners who planned to hire more employees in the next three months rose to 12% in June from 10% the previous month. The figure is approaching a normal level and was the best since 2007, the NFIB said.
Overall, 12% of owners reported adding an average of 3.3 workers per firm during the previous three months, while 13% of owners reported laying off an average of 3.1 workers in the same period. That produced a seasonally adjusted net gain of 0.05 workers per company in June.
The figures were in line with strong overall job growth last month as the economy rebounded from a first-quarter contraction largely caused by severe weather.
The Labor Department said Friday that the economy added 288,000 net new jobs in June and the unemployment rate fell to 6.1%.
NFIB chief economist Bill Dunkelberg said the improved labor market views did not offset other concerns from small-business owners.
"While reports of actual net job creation per firm were positive, consumer and business owner optimism remain low, with both spending growth and sales expectations weak," he said. "This means there are more jobs but not much more output."
Chris G. Christopher, director of consumer markets at IHS Global Insight, said the bad in the survey results outweighed the good.
"There is good news on hiring plans. However, small businesses are considerably more pessimistic in their economic outlook," he said. "The recent turmoil in northern Iraq, food price inflation, and elevated fears of energy price spikes are weighing down many small businesses."
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