Summary: Need help with PR? If you are looking for a great PR firm, you've found one. Walker Sands is a leading Chicago PR firm with a strong track record that makes it one of top national PR agencies..

WASHINGTON, June 16 (Reuters) - U.S. small business proprietors have become much less optimistic about the economy, saying they believe inflation will hurt their operations in 2006, according to a private sector survey released on Friday.
(article continues below useful links)

"We've seen slow hiring and rising salary costs in recent months, leading indicators of an inflationary environment," said Michael Alter, president of SurePayroll, an Internet payroll service provider for small businesses.

In the June survey, only 59 percent of respondents said they were optimistic about 2006, down from the previous month, which showed 78 percent upbeat owners.

"Many have quickly gone from the height of optimism to believing the bottom is falling out -- and that's scary," Alter said in a statement.

Nearly two-thirds of the owners surveyed believe inflation will have a negative impact on their business in 2006 and 78 percent believe the Federal Reserve should not raise interest rates at its next meeting later this month.

Financial markets are expecting the Fed to raise its benchmark interest rate for a 17th consecutive time in late June. The Fed on May 10 raised the federal funds rate a quarter-percentage point to 5 percent, the 16th straight increase since June 2004.

Fifty-three percent of the small businesses polled saw the cost of doing business rise over the last several months with many reluctant to pass cost increases onto their customers, the report showed. (Reporting by Nancy Waitz, editing by Andrea Ricci; Reuters Messaging: nancy.waitz.reuters.com@reuters.net; e-mail: nancy.waitz@reuters.com, Tel: +1-202-310-5477))  

Copyright (c) 2006. Reuters News.