WASHINGTON – Small businesses trying to obtain a loan over the past few months, are finding it's not an easy process, but other areas look promising for 2006. According to the latest data from the National Federation of Independent Business Optimism Index survey, positive signs were found among job creation, inventory investment and capital spending data, possibly forecasting good news for domestic spending growth. NFIB Chief Economist William Dunkelberg said November and December readings indicate that the economy is hot, but not sizzling. Inflation, which gave researchers a fright in November, eased. "Consumers may cut back a little, but increased government and investment spending could offset much of the decline," Dunkelberg said. "Domestically, things look pretty good for a solidly performing economy in 2006, but it won't set any records for growth." Borrowing activity fell four points from November to 34%, and the net percent of owners reporting loans harder to get in recent months remained historically low at a net 3%. The reported cost of short-term money was 7.9%. Only 3% cited the cost and availability of credit as their number-one business problem. Thirty-five percent reported all their credit needs met, compared to 5% who reported problems obtaining financing. Employment increases offset reductions in December, adding virtually no new employees per firm, NFIB found. Slightly more than half of those surveyed hired or tried to hire one or more workers, while more than eight of 10 said they could find few or no qualified applicants. The leading business problem is the availability of qualified workers, a trend that has risen in recent months and signals tighter labor markets, according to NFIB. That means "more pressure on labor compensation and, possibly, lower profits." Hiring plans in all industries were solid. The number of small-business owners planning to add to their inventories rose a point to a surprising net 9% in December, a level rarely reached, NFIB said. Seasonally adjusted, a net 3% increased inventories. A net-negative 3% (seasonally adjusted) reported inventories too low, a relatively lean posture. Owners say they don't see a problem with current stocks relative to sales, according to NFIB. Reports of quarter-to-quarter sales volume gains rose four points to a net 8% of all owners and reports of sales gains, unadjusted, were good, with 28% reporting higher sales. Although easing a point to 63%, owners reported solid capital outlays over the past six months. Nearly half picked up new equipment, slightly more than one-fourth added vehicles, 16% spent for fixtures and furniture and 15% enhanced facilities. Eight percent acquired new buildings or land. Overall, for the small-business sector, which are producers of half the private Gross Domestic Product, 2006 is off to a good start, with the Optimism Index solidly above the 30-year average and plans for capital spending, inventory investment and job creation solidly above historic averages. -

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