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By Jeffry Bartash, Market Watch–

Small businesses are paying more to retain or attract skilled workers, but they might not be hiring as many in the months ahead.

The latest survey by the National Federation of Independent Business, released Tuesday, shows that firms became more pessimistic in February. Investment and hiring plans were scaled back as small-business owners expressed growing worry about the 2016 presidential election.

William Dunkelberg, chief economist at the NFIB, called the outlook for small businesses “ho hum,” saying companies are “just treading water.”

The U.S. economy has continued to add more than 200,000 new jobs a month, a feat that would become almost impossible if small businesses froze employment. Energy producers have cut thousands of jobs to cope with cheap oil and manufacturers have held the line on employment with falling exports taking a bite out of profits.

Small businesses have fared better over the past year. One of their biggest problems, they’ve repeatedly complained, has been finding enough skilled workers to fill open jobs. Some 28% of firms said positions went unfilled last month. And 42% said they could find few, or so, suitable candidates.

As a result, small businesses have increased pay. Owners “continued to report widespread gains in worker compensation,” the NFIB said.

Some economists believe the upward tilt in pay is likely to push U.S. hourly wage growth toward the 3% mark from 2.2% in February. That would give a boost to consumption and the overall economy.

Others point to a worsening outlook and declining profits. The NFIB said more firms are swallowing the increase in labor costs at the expense of profits, giving them less incentive to invest.

The 2016 presidential election, meanwhile, is getting the attention of small businesses. Democrats are touting proposals to tax and regulate businesses while Republican front-runner Donald Trump has espoused policies that could lead to a trade war with China and Mexico.

“All of this generates uncertainty, the enemy of spending and hiring behavior that would move the economy forward at a faster pace,” the NFIB said.