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Survey: Small business confidence increases

Small business owners’ confidence increased for the second straight month in May, rising to its highest level in sevendiscover1 months, according to the Discover Small Business Watch. The index rose to 87.4 from 85.1 in April, driven in part by more small business owners believing the economy is improving.

“This boost could be significant because we were polling following the week in which the Greek banking crisis reverberated through Europe, the gulf oil spill intensified, and the Dow Jones plunged below 10,000,” said Ryan Scully, director of Discover’s business credit card. “By their responses, small business owners are seeing improvement in the economy in spite of bad news.”

In May, 35% of small businesses surveyed said they believe the economy is getting better, up from 31% in April; 51% say the economy is getting worse, down a point from the previous month; and 12% see the economy as the same, down from 14% in April.

The percentage of small business owners rating the current economy as good or excellent was 12% in May, compared to 13% in April. The April and May ratings on the current state of the economy are the highest since June 2008. Thirty-two percent rate the economy as fair in May, while 56% still think it’s poor.

Other May Confidence Indicators:

  • Small businesses reporting cash flow issues held steady at 45%, the lowest number in seven months. Forty-eight percent reported no cash flow issues, and 7% were unsure.
  • 28% of small business owners say economic conditions for their businesses are getting better, down from 30% in April; 44% said conditions are getting worse in May, down from 48% in April; and 24% said things are staying the same, up from 19% in April.
  • 25% of small business owners indicated they were increasing business spending in May, up from 23% in April, while 46% said they were reducing spending this month, compared with 43% in April, and 31% said they are spending the same, up from 25% in May.

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