U.S. small business confidence rebounded in July from a 15-month low as owners anticipated solid sales and inventory growth, providing another boost to the economic outlook for the third quarter.
The National Federation of Independent Business said on Tuesday its Small Business Optimism Index increased 1.3 points to 95.4. About 1,495 businesses took part in the survey. Last month's increase partially recouped June's plunge, which had pushed the index to its lowest level since March 2014.
Data on automobile sales, employment and the services sector have suggested a steady build-up of economic momentum at the start of the third quarter after gross domestic product expanded at a 2.3 percent annual rate in the second quarter.
Seven of the index's 10 components increased last month, while three continued to decline.
Owners were upbeat about business conditions over the next six months, and their expectations about sales improved after weakening for several months. They were optimistic about investing in capital and inventories.
There was an increase in the number of small business owners who said that now was a good time to expand.
The survey's labor market gauges improved after weakening a bit in June. Fifty-seven percent reported hiring or trying to recruit workers in July, up five percentage points from June.
Twenty-five percent of all owners reported job openings they could not fill, up one point from June, but four points below the highest reading for 2015. About 23 percent of owners reported raising worker compensation, up two points from June.
The survey pointed to tame inflation pressures in the near term. Thirteen percent of small business owners reported reducing their average selling prices in the past three months, down one point from June.
About 17 percent reported price increases, also down a point from the prior month. Seventeen percent said they planned to raise average prices in the next few months, down two points from June.