Small business optimism bounces back in June

Wells Fargo Research Team Wells Fargo

The NFIB Small Business Optimism Index jumped 6.2 points to 100.6 in June, as business re-openings bolstered expectations and hiring. Attitudes have likely grown more cautious since the survey was taken, however.

Small Business Optimism May Be a Bit Premature

The bounce back in Small Business Optimism to the 100 level is heartening,but we fear it may be a bit premature. The survey likely came too early to reflect the sustained rise in new COVID cases, which have now elicited a new round of shutdowns.

Sales expectations surged 37 points, swinging from -24% to 13%. The proportion of business owners that expect the economy to improve rose 5 points to 39% and plans to hire doubled to 16%.

A Great Deal of CautionBehind the Upbeat Headlines

The rise in the NFIB is tempered somewhat by the rising share of firms expecting earnings to improve, which fell 9 points to -35%.

Capital spending plans edged higher, climbing 2 pts to 22%. The rise may reflect needs to investin personal protection equipment.

June's rise in Small Business Optimism appears to have gotten a temporary assistfrom prior business re-openings, modificationsand expansionsto the PPP, and the buoyant stock market.

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Wells Fargo Research Team

Wells Fargo

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