Small Business Confidence Surges

The NFIB’s small business confidence index came in at 96.6 for May — the highest reading since 2007.

That also beat expectations for 95.8.

Pantheon Macro’s Ian Shepherdson says this index is more important than payrolls, and sees this jump to the as a major shift.

“At last, small businesses are on the move. We have been waiting for four years for a clean break to the upside, and it’s finally here. The rise in the headline largely reflects a 9-point jump in economic expectations and a 5-point rise in sales expectations, but several other components rose too.”

Here’s his chart:

NFIB chief economist Bill Dunkelberg was more subdued in his reading of the data, noting that 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.

“…The entire gain in optimism was driven by soft components such as expectations about sales and business conditions,” Dunkelberg said in a statement. “With prices being raised more frequently in response to rising labour and higher energy costs it is clear that small businesses are unwilling to invest in an uncertain future.”

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.