WASHINGTON (Reuters) - U.S. small business sentiment weakened in September for the fourth time in five months as fewer owners expected to add staff and make capital investments.
The National Federation of Independent Business said on Tuesday its optimism index fell 0.1 point to 92.8 last month.
The drop is a sign the U.S. economy is taking a hit from uncertainty over the possibility of tax hikes and government spending cuts next year, said William Dunkelberg, chief economist at the NFIB.
“Owners are in maintenance mode - spending only where necessary and not hiring, expanding or ordering more inventories until the future becomes more certain,” Dunkelberg said.
He suggested uncertainty over the outcome of the country’s upcoming general election is also probably hurting sentiment.
The NFIB had already released on Thursday the labor components of its small business optimism index, which showed a net 4 percent of firms were expecting to create jobs in September, down from 10 percent the prior month.
That weighed heavily on the overall index. Also holding back optimism, the share of firms planning capital investments in the next three to six months fell to 21 percent from 24 percent.
The U.S. economy has grown at a lackluster pace this year, which has hurt President Barack Obama’s chances of winning the November 6 election. Opinion polls point to a very tight race between Obama and Republican challenger Mitt Romney.
And looming over the economic outlook, the federal government is scheduled to tighten its belt severely in January unless lawmakers pass an alternative plan.
Reporting by Jason Lange; Editing by Neil Stempleman