New data showed that small business optimism rose 1.5 points to 105 in May, surpassing pre-shutdown levels.
According to the National Federation of Independent Business (NFIB), six factors in the Small Business Optimism Index improved, three were unchanged, and one fell. Capital spending plans increased along with actual outlays, while expectations for sales, business conditions, and expansion all saw a boost. In addition, earnings, job creation, and compensation stayed strong.
“Optimism among small business owners has surged back to historically high levels, thanks to strong hiring, investment, and sales,” NFIB President and CEO Juanita D. Duggan said in a press release. “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.”
The index showed an increase in capital outlays by six points to 64 percent — the highest level since February 2018. And 30 percent of small business owners anticipate capital outlays in the next few months, with plans to invest in transportation (45 percent), manufacturing (39 percent), professional services (39 percent), and construction (31 percent) coming out on top.
“Small business owners are demonstrating a continued confidence in the strength of the economy and are betting capital spending dollars on it,” added NFIB Chief Economist William Dunkelberg. “This solid investment performance is supporting ongoing improvements in productivity and real wages.”
The data also showed that a net nine percent of all owners reported higher nominal sales in the past three months, while the net percent of owners expecting higher real sales volumes rose to 23 percent. A net 16 percent expect better business conditions, up three points, and 30 percent say now is a good time to expand, which is a five-point increase.
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The May NFIB Jobs Report also revealed that small business owners added a net addition of 0.32 workers per firm. However, 25 percent said that difficulty in finding qualified workers was their biggest business problem, with 54 percent reporting few or no qualified applicants for open positions.
