The NFIB Small Business Optimism index improved 1.4 points in May to a reading of 96.6. This was the third consecutive monthly increase and the index now stands at the highest level since September 2007. The average reading for periods of economic recovery is 90.2.
The May reading was above the consensus expectations for a reading of 95.5 as well as last month’s level of 95.2.
“May’s numbers bring the index to its highest level since September 2007. However, the four components most closely related to GDP and employment growth (job openings, job creation plans, inventory and capital spending plans) collectively fell 1 point in May. So the entire gain in optimism was driven by soft components such as expectations about sales and business conditions,” said NFIB chief economist Bill Dunkelberg.
“With prices being raised more frequently in response to rising labor and higher energy costs it is clear that small businesses are unwilling to invest in an uncertain future. As long as this is the case the economy will continue to be 'bifurcated', with the small business sector not pulling its historical weight in the GDP numbers,” Dunkelberg added.
The Plans to Increase Employment component was reported at 10 percent, which was up two percent from April.
Those expecting to see the economy improve rose nine percent from last month’s reading.
Prior Readings for Comparison:
- April: 95.2
- March: 93.4
- February: 91.4
- January 2014: 94.1
- December: 93.9
- November: 92.5
- October: 91.9
- September: 93.9
- August: 94.1
- July: 94.1
- June: 93.5
- May: 94.4
- April: 92.1
- March: 89.5
- February: 90.8
- January 2013: 88.9
- December: 88.0
- November: 87.5
- October: 93.1
- September: 92.8
- August: 92.9
- July: 91.2
- June: 91.4
- May: 94.4
- April: 94.5
- March: 92.5
- February: 94.3
- January 2012: 93.9
- December: 93.8
- November: 92.0
- October: 90.2
- September: 88.9
The report is based on the responses of 685 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of June 2012.
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