A monthly measure of optimism among small business owners has increased, but continues to reflect concerns over inflation and filling job openings.

“Small business owners remain very pessimistic about economic prospects this year,” said Bill Dunkelberg, chief economist of the National Federation of Independent Business. “Inflation and labor quality have consistently been tough complications for small business owners, and they are not convinced that it will get better in 2024.”

The NFIB reported its Small Business Optimism Index climbed to 91.9 in December. That’s up 1.3 points from November, but remained below the average reading of 98 for a 24th straight month.

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For December, five of 10 components of the index advanced, three retreated and two remained unchanged.

The proportion of NFIB members responding to the survey upon which the December index was based who expected the economy to improve rose six points. But at a net negative 36 percent, more members anticipated worsening conditions.

A net 24 percent of members planned capital improvements in the next few months, up a point. A net 8 percent said they considered now a good time to expand, unchanged from a month ago.

The share of owners who expected increased sales rose four points to the highest level since January 2022. But at a net negative 4 percent, more forecast lower sales.

Expectations for increased earnings rose seven points. But at a net negative 25 percent, more members anticipated decreased earnings. Among owners reporting lower profits, 31 percent  blamed weaker sales and 17 percent cited higher material costs.

A net 16 percent of owners reported plans to increase staffing, down two points from November. A net 40 percent of owners reported hard-to-fill job openings, unchanged from a month ago.

Asked to identify their single most important problem, 23 percent cited inflation followed by quality of labor at 20 percent.

A net 25 percent of members reported raising average selling rices, while a net 32 percent said they planned price hikes in the next three months. A net 36 percent reported increasing compensation, while a net 29 percent reported plans to raise compensation in the next three months.

The proportion of members who said they plan to increase inventories fell two points to a net negative 5 percent. The share of those who said they consider existing inventories too low fell five points to a net negative 5 percent.