Rebounding on good news from the labor market, the nation’s small businesses perked up in January, lifting the National Federation of Independent Business Small Business Optimism Index nearly two-and-a-half points to 98.9 (1986=100).

Although actual job creation was weak, in January, key labor indicators, including job creation plans and job openings, accounted for most of the upward momentum. Seven of the 10 index components posted gains, two were unchanged.

NFIB Researchers determined that in the coming three months, 23 percent of small firms plan to create new jobs, a hike of nine points. Just 5 percent plan workforce reductions, down four points, yielding a seasonally-adjusted net 17 percent planning to create new jobs.

“This is a near-record high reading,” said NFIB chief economist William Dunkelberg. “December’s labor market clouds have dissipated.”

Small Business Optimism Index Components

* Plans to Increase Employment 17%, +7
* Plans to Make Capital Outlays 30%, +4
* Plans to Increase Inventories 2%, +2
* Expect Economy to Improve -1%, +3
* Expect Real Sales Higher 22% +4
* Current Inventory -2% +5
* Current Job Openings 26% +7
* Expected Credit Conditions -7% 0
* Now a Good Time to Expand 17% 0
* Earnings Trends -21% -6
Total Change from the prior month, 26

Column one is the current reading, column two is the change from the prior month.

For a pdf copy of the full report, go to http://www.nfib.com/page/researchFoundation.

JCK