Small business optimism soared in May to its highest level in 34 years, with some components hitting all-time highs, the National Federation of Independent Businesses said Tuesday.
The NFIB’s Small Business Optimism Index rose 3 points in May to a reading of 107.8, its second-highest level in 45 years and strongest level of the recovery. Economists were expecting the index to rise to 105.2 from 104.8.
The May reading was just under the 1983 record of 108.
Several measures hit the highest levels ever recorded. Plans for business expansion, reports of positive earnings trends, and compensation increases broke new records. Expectations for strong increases in sales reached their highest level since 1995.
“Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages,” said NFIB Chief Economist Bill Dunkelberg. “While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates.”
The NFIB cites tax cuts and regulatory cuts as helping drive the optimism of small businesses.
“The new tax code is returning money to the private sector where history makes clear it will be better invested than by a government bureaucracy,” the NFIB said in its report. “Regulatory costs, as significant as taxes, are being reduced.”