Optimism among the country's small businesses slipped in February as entrepreneurs worried about repeatedly weak sales, the National Federation of Independent Business said in a survey released on Tuesday.
The NFIB said its monthly small business optimism index dropped 1.3 points to 88.0 in February from January with the index below 90 for 17 straight months, and below 90 in all but four months since January 2008.
Credit access is not a major factor holding up economic growth, at least the kind of growth we want, said William Dunkelberg, chief economist for NFIB.
The survey showed 34 percent of the small business owners said weak sales are their top business problem.
Owners will borrow when expectations that sales will rise and generate new revenue to pay for investments and new hires become positive, Dunkelberg said.
Small business owners continued to liquidate inventories and weak sales trends gave little reason to order new stocks.
Ordinarily leaner stocks should mean big production gains, but stubbornly high unemployment and sluggish income growth are holding back domestic demand.
The U.S. economy resumed growth in the second half of 2009 following the worst recession since the 1930s. The labor market has lagged the recovery as businesses remain skeptical of the sustainability of the rebound.
Something is preventing owners from pulling the trigger, Dunkelberg said. Very few owners felt that growth opportunities were solid enough to warrant expansion.
Owners complained that poor sales was their top problem, and there is no need to hire with no new customers, NFIB said. Over the next three months, more small business owners are planning to cut jobs than add.
Net job creation will appear in the coming months, but the gains will be painfully slow with timid consumer spending, especially in the service sector, said Dunkelberg.
Analysts widely expect nonfarm payrolls to swing into positive territory in March. The economy has shed 8.4 million jobs since the start of the recession in December 2007.
Payrolls have dropped every single month since then, with the exception of last November when they grew by 64,000.
(Reporting by Nancy Waitz; Editing by Andrew Hay)