The nation’s entrepreneurs turned decidedly downbeat in August, forcing the National Federation of Independent Business (NFIB) Small-Business Optimism Index to fall more than two points to 95.9 (1986 = 100), the lowest reading recorded since March 2003. The NFIB predicts growth will slow to the low 2 percent range in the first quarter of 2007. The percent of firms with unfilled job openings and the percent of owners planning to create new jobs both neared historic high levels. However, of the owners who hired or tried to hire in the past few months, 84 percent reported few or no qualified applicants for their open positions, evidence of an unusually tight labor market, according to the NFIB. Regular borrowing activity was reported to reach the highest level recorded since 1986, but owners expect the coming months to bring increased borrowing difficulties, the NFIB reports. Down a point to 34 percent were those reporting lower earnings over the past three months. Business owners point to a variety of factors:

• 38 percent noted weaker sales

• 15 percent cited more expensive labor

• 18 percent blamed costlier materials, especially energy

• 12 percent blamed lower selling prices

• 3 percent each blamed higher insurance, financing, regulatory costs and taxes Expected real sales took a dive in August as the net percent of owners expecting increases fell eight points to 18 percent. As a result, more firms plan to cut inventories than to add to them.