Small-business owners’ confidence rose in May for the second consecutive month, reaching its highest level in seven months, according to survey data Discover Financial Services released June 1.
The Discover Small Business Watch rose to 87.4, up 2.3 points from 85.1 in April, as more small-business owners said they believe the economy is improving.
The Business Watch is a monthly report measuring the relative economic confidence of 750 randomly selected small-business owners based on their responses to six questions. Its creators established a base index of 100 when the Watch began in August 2006.
Some 35% of business owners surveyed in May said the economy is getting better, up from 31% who said so in April. Fifty-one percent of respondents said the economy is getting worse, down from 52%.
Asked to rate the state of the economy, 12% in May said it was good or excellent compared with 13% who said so in April. Respondents’ ratings of the economy in April and May were the highest measured since June 2008. Some 32% rated the economy as fair, up from 29% who said so in April, and 56% said it is poor, down from 57%.
Some 28% of respondents said economic conditions for their own businesses are improving, down from 30% who said so in April. Some 44% said economic conditions for their businesses are getting worse, down from 48%. Twenty-four percent said things are staying the same, up from 19%.
One-fourth of business owners said they plan to boost spending on their businesses in May, up from 23% who said so in April. Some 46% said they would reduce business expenditures this month, down from 43%.
The overall confidence-index rise in May “could be significant” because of its timing, Ryan Scully, Discover business credit card director, said in a statement.
Discover polled business owners in early May, about a week after the Greek banking crisis hit, the oil spill in the gulf worsened and stock market indexes plunged. “By their responses, small-business owners are seeing improvement in the economy in spite of bad news,” Scully said.