A measure of optimism among small business owners continues to drop even as concerns mount over business and labor conditions.

The National Federation of Independent Business reported its Small Business Optimism Index fell nine-tenths of a point to 95 in January. The index now stands three points below its 47-year average of 98.

“The COVID-19 pandemic continues to dictate how small businesses operate, and owners are worried about future business conditions and sales,” said Bill Dunkelberg, chief economist of the NFIB. 

Dunkelberg said additional pandemic relief night help. “As Congress debates another stimulus package, small business owners welcome any additional relief that will provide a powerful fiscal boost as their expectations for the future are uncertain.”

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 January, four of 10 components of the index retreated, two advanced and four remained unchanged.

The proportion of those who responded to the survey upon which the January index was based who expect the economy to improve over the next six months dropped seven points from December to a net negative 23 percent. That component has dropped 55 points over the past four months to its lowest level since November 2013.

The share of those expecting higher sales for the next three months fell two points to a net negative 6 percent.

The proportion of those reporting higher earnings also fell two points. At a net negative 16 percent, more respondents reported lower than higher earnings. Among those reporting lower earnings,
43 percent blamed weaker sales and 17 percent cited seasonal changes. Among those reporting higher earnings, 60 percent credited increased sales volume. 

A net 22 percent of respondents reported plans to make capital outlays, unchanged from December. A net 8 percent said they consider now a good time to expand, also unchanged.

A net 17 percent of respondents reported plans to increase staffing, unchanged from last month. A net 33 percent reported hard-to-fill job openings, up a point.

A net 4 percent reported plans to increase inventories, unchanged from December. A net 5 percent said current inventories were too low, down two points.