Small business owners are becoming more optimistic and expect a 'short-lived' recession, survey shows

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  • The small business optimism index rose to 94.4 in May from 90.9 in April, the National Federation of Independent Business survey released Tuesday showed.
  • The survey's uncertainty index jumped seven points to 82, but expected conditions in the next six months also ticked up five points to a net 34%, according to the survey.
  • "It's still uncertain when consumers will feel comfortable returning to small businesses and begin spending again, but owners are taking the necessary precautions to reopen safely," said NFIB's Chief Economist Bill Dunkelberg.

Small businesses are feeling more optimistic about the future and expect any recession to be "short-lived" as the US economy reopens from coronavirus-induced lockdowns.

Small business optimism rose 3.5 points to 94.4 in May, the National Federation of Independent Business' survey released Tuesday showed. It's the indexes biggest jump since 2017.

The gain was larger than economists had forecast, but still falls below the pre-coronavirus level of 104.5 reached in February. The index plunged in March by the most-ever as the coronavirus pandemic hit the US economy. The measure also fell in April, but not by as much as economists expected. Advertisement

"As states begin to reopen, small businesses continue to navigate the economic landscape rocked by COVID-19 and new government policies," said NFIB's chief economist Bill Dunkelberg in a statement. "It's still uncertain when consumers will feel comfortable returning to small businesses and begin spending again, but owners are taking the necessary precautions to reopen safely."

There is some fear of the unknown as owners reopen shop and begin to call back their employees — the survey's uncertainty index increased seven points to 82 in May. Still, expected business conditions in the next six months jumped five points to net 34%, after a 24-point leap in April.

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Owners are "optimistic about future business conditions and expect the recession to be short-lived," according to NFIB. On Monday, the official arbiter of recession start dates said the US officially fell into a recession in February.

Sales expectations also recovered from a record slump in the previous month. In May, the measure increased 18 points to net negative 24%, from a low of negative 42% reached in April. More companies said in May that they plan to invest and hire, but in small numbers. A seasonally adjusted 8% of small business owners also said that they plan to create new jobs in May. This new job creation is driven in part by the Paycheck Protection Program, which forgives loans to businesses if they're mostly used for paying employees, according to NFIB. Advertisement

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