U.S. small business owners gained confidence in April and were surprisingly bullish about capital expenditure plans, further supporting views that economic growth was rebounding after a dismal first quarter. The National Federation of Independent Business said on Tuesday its Small Business Optimism Index rose 1.7 points to 96.9 last month. It was the largest gain since December.
“A fairly positive tone. The data add to the evidence that the weakening in growth in first quarter was largely due to ‘transitory’ factors,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York. Small businesses historically have accounted for half of private gross domestic product. The economy is clawing back after being slammed by a mix of bad weather, disruptions at ports, a strong dollar and deep spending cuts by energy firms.
Data on employment and consumer sentiment have suggested a pick-up in growth momentum at the start of the second quarter, but the dollar and lower oil prices continue to weigh on manufacturing. Nine of the NFIB index’s 10 components rose last month, with the exception of sales. The NFIB said despite the turmoil in the energy sector, “the shale states exhibited stronger capital spending and hiring than the rest.”