Small businesses are still not ramping up hiring, but overall optimism over the economy is gaining some ground, according to an index from the National Federation of Independent Business.
The NFIB’s Index of Small Business Optimism gained 1.6 points in May with a reading of 92.2.
It is the best reading since September 2008’s 92.9 index. That reading was followed by a five-point decline in October that ushered in the rapid deterioration in the fourth quarter of 2008.
In May, seven of the 10 index components rose, except for job creation and capital expenditure plans.
In May, businesses were still letting workers go, with the average change in employment per firm at negative .5 workers – that’s worse than the prior three months.
The frequency of reported capital expenditures over the past six months was unchanged at 46 percent of all businesses, two points above the 35-year record low reached most recently in December 2009.
“The performance of the economy is mediocre at best,” said William C. Dunkelberg, NFIB’s chief economist. “Given the extent of the decline over the past two years, pent up demand should be immense, but it is not triggering a rapid pickup in economic activity.”
Business borrowers said they were still having difficulties in arranging credit, although the credit crunch may be easing. A net 13 percent reported loans harder to get than in their last attempt, down 1 point from April and down two points from March.
The small business sector is in maintenance mode, not growth,” Dunkelberg said. “The best thing Washington and state legislatures can do is adopt a ‘do no harm’ mentality. If they want small business owners to start hiring again, they need to stop considering policy proposals that raise the cost of doing business.”
