US small business optimism improves in May - NFIB
Small business sentiment in the US improved in May, according to the National Federation of Independent Business.
The small business optimism index rose to 105.0 from 103.5 in April, beating expectations for a reading of 102.0.
Small business owners’ expectations for sales, business conditions and expansion all rose, while earnings, job creation, and compensation remained very strong.
"Optimism among small business owners has surged back to historically high levels, thanks to strong hiring, investment, and sales," said NFIB President and chief executive officer Juanita D. Duggan.
"The small business half of the economy is leading the way, taking advantage of lower taxes and fewer regulations, and reinvesting in their businesses, their employees, and the economy as a whole."
NFIB chief economist William Dunkelberg said small business owners are demonstrating a continued confidence in the strength of the economy and betting capital spending dollars on it.
"This solid investment performance is supporting ongoing improvements in productivity and real wages," he said.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the index is sensitive to the stock market with a lag of a couple of months, and this rebound is consistent with the recovery in the market through April this year.
"The three most stock-sensitive components - economic, sales and earnings expectations - all rose, but the best news in this report is the three-point jump in capex plans, to 30. The index peaked at 33 last August but dropped to just 25 in December, and the rebound since then has been modest. The May jump comes as a relief but note it remains consistent with much slower growth in business capex than last year; what matters is the ear-over-year change in the index, not the level.
"Still, this is a big step in the right direction, pointing to stronger spending in late summer and fall."