"Pessimism about the economy and future sales did moderate"
- William Dunkelberg, the group's chief economist
Confidence among small businesses in the world's largest economy climbed to a one-year high in May, as the economic outlook over the next six month improved. According to figures from The National Federation of Independent Business, a gauge of business optimism jumped to 94.4 from 92.1 in a month earlier, hitting the highest level since May 2012. Eight of 10 components contributed to the improvement; however, capital spending plans remained unchanged, while job creation plans fell. The gains in the index are adding to signs that even despite the slower-than-expected growth in the first quarter, the cooling in activity will come to an end soon, as Americans are adjusting to recent tax hikes and deep government spending cuts.
Earlier this month data showed that payrolls rose 175,000 last month after a revised 149,000 gain in the prior month, beating analysts' expectations of a 163,000 increase. The overall unemployment rate nonetheless, rose to 7.6% compared with 7.5% in April, since more people entered the labour force. Meantime, companies are feeling more optimistic about the prospects for demand in the upcoming months even despite recent payroll-tax increase, which curbed consumer spending power.
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