Sentiment among U.S. small businesses unexpectedly cooled at the end of 2019 after climbing to a four-month high in November.

The National Federation of Independent Business’s index of optimism fell to 102.7 in December from 104.7 a month earlier.

The median forecast in a Bloomberg survey of economists called for a reading of 104.6. Six of the report’s 10 components declined, led by a gauge of earnings and several measures related to the labor market.

Key Insights

• Even with the decline last month, the index finished 2019 above the two-year low of 101.2 it posted at the start of last year, indicating small companies remain upbeat about the economy’s prospects.
• The NFIB’s measures of economic expectations and sales expectations both improved in December.
• The report follows a mostly uneventful jobs report that implied economic growth was easing and raised concerns about wage growth stagnation.
• As reported last week, fewer small businesses said they plan to add to headcounts or boost capital spending.
• The group’s measure of earnings erased all of November’s 10-point gain, according to the report.