Small businesses remain upbeat, but concerned about hiring

Small business owners are a generally upbeat bunch, but their optimism may be leveling off because of the tight labor market and uncertainty about taxes.

A quarterly small business sentiment index released last week by Wells Fargo and Gallup registered at 106, down from 107 in the first quarter. The index, based on a survey of 603 owners, is still close to its highest level in more than a decade, but a component reflecting future expectations fell to 61 from 65.

Forty-three percent of the owners said they are likely to hire in the next 12 months. That's one of the highest readings in surveys of owners issued in recent months by banks and small business advocacy groups. But nearly two-thirds in the Wells Fargo/Gallup survey said finding qualified staffers will be a challenge to their businesses.

Taxes are still a question mark or a negative for many of the owners surveyed. Thirty-nine percent said they don't know how the new tax law will affect their companies, and 27 percent said they don't expect it to benefit their businesses.

But one provision of the tax law may be encouraging a majority of owners to buy equipment. The law about doubled to $1 million the Section 179 deduction for equipment purchases. Sixty-two percent of the owners surveyed said they are likely to buy equipment in the next 12 months.

The survey was conducted in early April.