Small business owners slightly more optimistic

Small-business owners were slightly more optimistic about the economy last month but their outlook remained poor, according to a private survey released Monday.

The Small Business Optimism Index, a monthly gauge from the National Federation of Independent Business, rose to 88.9 in January, up 0.9 percentage points from the previous month.

It was the second straight modest monthly rise after the index tumbled in November as concerns mounted about tax increases and budget cuts set to hit at the start of the year.

The index fell to 87.5 — its lowest point since early 2010 — and only rose a bit, to 88, in December

Although the White House and Congress struck a last-minute deal to avoid most of the tax increases, small-business owners remained pessimistic, the trade group said.

They were particularly down on the prospects for economic growth after the government reported that the economy contracted 0.1% in the final three months of last year.

“With the dismal news that our economy actually contracted in the fourth quarter of 2012, it isn’t any wonder that more small firms expect their real sales volumes to fall, few have plans to invest in new inventory, and hardly any owners are expanding or hiring,” said Bill Dunkelberg, the group’s chief economist.

He said that while corporate profits have been at record levels, “small businesses are still struggling to turn a profit.”

As a result, the survey showed a drop from December in businesses planning to increase inventories and in those who believe this is a good time to expand.