Small businesses grew more optimistic in June, NFIB says

Optimism among small-business owners rose in June for the second straight month, a survey shows, but a fresh spike in coronavirus cases and tightening restrictions in states such as California and Texas could snuff out hopes for a faster economic recovery.

The small-business optimism index climbed 5.2 points last month to 100.6, marking the highest level since February, the National Federation of Independent Business said Tuesday. The increase was well above Wall Street’s forecast for a reading of 96.

The surprisingly positive increase, however, didn’t capture the sudden shift in sentiment toward the end of the month as a surge in coronavirus cases in states that reopened the earliest forced them to reimpose restrictions.

Another closely followed survey by Homebase, for example, indicated a decline in employment or shifts worked in early July at restaurants, retailers and other Main Street businesses. While the Fourth of July holiday accounted for some of the decline, it couldn’t explain all of it.

On Monday, California ordered many small businesses to re-close in an effort to limit the latest outbreak.

Most small businesses expect sales to rise from historically depressed levels in late March and early April.

“Owners are anticipating improving sales as the economy continues to reopen,” said the NFIB, the nation’s largest advocacy group for small businesses.

Employment levels were weak, however, and investment was still in recession. The latest closures in California also rattled Wall Street.

The good news? Other large states where the coronavirus now appears in retrenchment are set to reopen a larger swath of their economies. New York, New Jersey and Pennsylvania are among them.