Small-business owners turned less optimistic about their economic prospects in January as a tumultuous stock market and intensifying concerns over global growth took a toll on confidence.

The National Federation of Independent Business's small-business optimism index, based on a survey of about 1,400 owners, slipped 1.3 points to 93.9, the lowest level in about two years. In 2015, the gauge averaged 96.1.

Most of the January decline was due to waning optimism over future business conditions and expected sales. "Uncertainty continues to cloud the future," the trade group said.

Respondents signaled the worst sentiment in 27 months when it comes to prospects six months out, and they reined in expectations for revenue in the coming months after having grown increasingly optimistic at the end of the year.

Still, hiring and overall spending among small businesses remained solid last month. Hiring was the best since September, though an elevated number of firms continue to express difficulty in finding applicants with the right skills for the jobs they seek to fill.

Amid that latest sign of slack in the labor market, newly hired workers were better compensated. A seasonally adjusted net 27% of small-business owners reported raising worker compensation, the strongest increase in firms raising pay since 2007. Meanwhile, a net 11% of small-business owners said they plan to create new jobs in the coming months, down from a high 15% in December but on par with the average reported last year.

The NFIB's findings on small-business hiring follow a January report from payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics that showed another solid month of hiring from the small-business contingent helped offset a pullback in hiring at America's largest firms.

At least for now, small-business owners signaled the decline in sentiment wasn't affecting spending or expansion plans. Despite a broader trend of corporations slashing spending budgets, firms surveyed by the NFIB continued to make capital outlays at a solid clip and they suggested no planned changes to capital expenditures in the months ahead. That is as a rising number of owners said it is a good time to expand.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

 

(END) Dow Jones Newswires

February 09, 2016 08:05 ET (13:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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