Tuesday, June 08, 2010

Small Business Optimism improves slightly in May

by Bill McBride on 6/08/2010 08:34:00 AM

From NFIB: Small Business Optimism Increases But Not Enough to Spur Hiring, Capital Spending

The National Federation of Independent Business Index of Small Business Optimism gained 1.6 points in May with a reading of 92.2. Although not a strong sign of recovery, it is headed in the right direction. It is the best reading since September 2008’s 92.9 index that occurred just before the five-point decline in October that started the rapid deterioration in the fourth quarter of 2008. In May, seven of the 10 index components rose, but job creation and capital expenditure plans barely gained and remained at recession levels.

“The performance of the economy is mediocre at best,” said William C. Dunkelberg, NFIB’s chief economist.
In May, firms still shed workers ... The small business sector is not contributing to private sector employment growth.
The outlook has improved, but the recovery is sluggish and hiring is "bleak".
“"The recovery in optimism we are currently experiencing is very weak compared to recoveries after 1982 or 1975."
Note: although the press release doesn't mention it, there is a heavy concentration of construction related businesses in the small business sector - and obviously that is one of the weakest sectors.