U.S. small-business optimism climbs to highest in seven months

PROVIDENCE – Optimism among small U.S. businesses rose to a seven-month high in May as companies increased capital spending plans, suggesting firms remain confident economic growth will continue.

The National Federation of Independent Business optimism index increased 1.5 points to 105 on more upbeat views of the economy, employment, capital outlays and sales, a report showed Tuesday. Analysts had forecast a 1.5-point decline in the gauge.

“Uncertainty levels remain high but owners are focused on a very busy Main Street,” report authors William Dunkelberg and Holly Wade wrote. “The surge in optimism was supported by solid gains in reported capital spending, hiring, inventory investment and profit trends.”

The fourth straight improvement in optimism, the longest streak in two years, is the latest sign of brighter assessments by small business owners despite trade-policy uncertainty. NFIB’s gauge, based on responses from 650 member firms surveyed in May, remains at one of its highest levels of the expansion and not far from the record 108.8 level in August.

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Six of 10 components improved while three were unchanged and one declined. The gauge of planned capital outlays and the measure of whether it’s a good time to expand both climbed to the best level since October.

Reade Pickert is a reporter for Bloomberg News.