The National
Federation of Independent Business (NFIB) reported on Tuesday its Small
Business Optimism Index jumped by 0.8 point to 90.5 in May, following a 1.2-point climb in the previous month. This represented the highest reading since December 2023 (91.9).
Nonetheless, the indicator remained below its historical average of 98 for the 29th
consecutive month.
Economists had predicted
the index to rise to 89.8 in May.
According to
the report, the May advance in the headline gauge was due to gains in 5
components, driven by a measure of small business owners expecting the
improvement in the economy (+7 points) and a measure of owners planning to
increase employment in the coming months(+3 points).
These
increases, however, were partly offset by declines in such 3 indicators, as a measure
of small business owners viewing current inventory stocks as “too low” (-4 points),
a measure of small business owners reporting positive profit trends (-3 points)
and a measure of small business owners expecting real sales to be higher (-1
points).
Meanwhile, a
measure of small business owners planning to increase inventories in the coming
months and a measure of small business owners judging that now is a good time to
expand were unchanged.
Commenting on
the latest data, Bill Dunkelberg, NFIB Chief Economist, said that, small
business owners have expressed historically low optimism for 29 consecutive
months, and their views about future business conditions are at the worst
levels seen in 50 years. “Small business owners need relief as inflation has
not eased much on Main Street,” he added.