Optimism among small business owners about the economy fell last month, according to a new survey.

The National Federation of Independent Business’s Small Business Optimism Index lost a point, slipping to 87.9, in June, after a marginal improvement in the last two months.

Sales trends have not been favorable, with record numbers of owners reporting lower sales than in prior periods. Seasonally adjusted, the net percent of owners reporting positive sales trends is -34 percent.

For the past year, consumer price index inflation has been negative and cuts in average selling prices have been reported at record rates. In June, the net percent raising selling prices was -17 percent. In other words, far more firms were cutting prices than raising them. In June, 13 percent raised prices, but 31 percent cut prices.

“When profits are bad, like now, small business owners cannot reinvest, except to replace things,” said NFIB chief economist Bill Dunkelberg.

Plans to make capital expenditures fell again to 17 percent, continuing a run of historically low readings. One consequence of this has been a huge reduction in inventories, with record numbers of firms reducing their inventories to line up stock with lower customer spending. In June, the net proportion planning to add to inventories over the next three months was -6 percent, indicating further planned reductions.

A major cost-cutting activity has been focused on one of the largest costs: labor. Over the past six months, owners have reduced employment at a record pace. Plans to expand employment got a boost in June (up four points to a net -1 percent of firms planning to hire in the next three months). The number of firms with job openings to fill increased two points to 11 percent in June. However, small employers continue to hold wages and other employee compensation in check, with 11 percent of owners raising compensation while 12 percent reduced it, the worst showing for a “raise” in survey history.

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