The Small Business Optimism index rose to its highest level since September 2007, growing to 96.6 in May from 95.2 in April, the National Federation of Independent Business said Tuesday.
Despite reaching the high since 2007, and gaining three straight months, the index remains "far below" levels usually seen during an expansion and similar gains during the recovery didn't foreshadow continued growth.
"May's numbers bring the index to its' highest level since September 2007," said NFIB chief economist Bill Dunkelberg. "However, the four components most closely related to GDP and employment growth (job openings, job creation plans, inventory and capital spending plans) collectively fell 1 point in May. So the entire gain in optimism was driven by soft components such as expectations about sales and business conditions."
"With prices being raised more frequently in response to rising labor and higher energy costs it is clear that small businesses are unwilling to invest in an uncertain future," he said. "As long as this is the case the economy will continue to be "bifurcated", with the small business sector not pulling its historical weight in the GDP numbers."
