The NFIB Small Business Optimism index jumped in May to 107.8, reaching the second highest level in the 45-year history of the survey, noted analysts at Wells Fargo.
Key Quotes:
“The latest survey shows renewed optimism about sales, which struggled a bit earlier this year when a series of storms depressed economic activity in the Northeast. Sales expectations rose 10 points to 31, which is just a few points shy of its cycle high hit in November.”
“Optimism about the overall economy also improved during May, with the outlook for general business conditions rising 7.0 points to 37.0.”
“The rise in small business optimism is consistent with other indicators that suggest economic growth ramped up significantly in the second quarter. Our own forecast calls for real GDP to expand at a 4.2 percent annual rate during the second quarter.”
“The recent strength in small business optimism not only validates the more upbeat economic forecasts making the rounds in recent weeks, but also makes more likely that the stronger economic growth will actually materialize.”
“The increase in capital spending plans is being driven by increased optimism about the economic outlook and improved pricing power. The proportion of small businesses planning to raise prices rose 5 points to a net 19 percent, the highest since 2008.”
“Business owners are also looking to boost productivity, which has become much more important as the labor market has tightened (…) The share of firms raising compensation rose 2 points to a net 35 percent, a new all-time high.”
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