Small Business Optimism Rises Slightly In May

The small business optimism index rose 0.2 points in May to 93.8, slightly extending April's 1 point bounce back from 2-year lows but remaining well below the 42-year average of 98. Four of the 10 components of the index showed gains in May, two were unchanged and four declined. Expectations that the economy will improve posted the largest gain, rising 5 points but remaining quite negative at minus 13. The two strongest components both declined, with plans to increase capital outlays falling 2 points to a still very solid 23, and job openings hard to fill was also down 2 points to 27, though business owners still find this as their fourth most important business problem. Plans to increase employment did rise 1 point, however, to 12. While earnings trends, the most pessimistic of the components, fell 1 point to minus 20, more business owners thought that now was a good time to expand, up by 1 point to 9.

Recent History Of This Indicator:
The small business optimism index moved up from two year lows in April to 93.6 but no additional strength is expected for May where forecasters are calling for 93.5. Employment readings improved in April though small business owners remained downbeat on the economic outlook.