(Bloomberg) -- US small-business optimism edged up in May to the highest level this year as firms grew less downbeat about the economy’s prospects.

The National Federation of Independent Business sentiment index rose 0.8 point to 90.5. The reading was slightly better than the median projection in a Bloomberg survey of economists, yet below the long-term average of 98.

Five of the 10 components that make up the sentiment gauge increased in May, led by a 7-point improvement in the share of owners who expect the economy to improve. Firms’ plans to increase employment also picked up. 

The gain in small-business optimism is only the second this year, and the index remains well below pre-pandemic levels as firms contend with high prices, interest rates and labor costs, as well as lingering hiring challenges.

The NFIB survey showed the share of firms planning to increase prices rose 2 percentage points to 28% after a big drop in the prior month to a one-year low. The proportion of owners indicating inflation was their top concern held at 22%. Some 6% said financing was their top business problem, the highest share in nearly 14 years.

The share of firms reporting job openings they couldn’t fill climbed 2 points in May to 42%, while 15% of firms said they plan to create new jobs in the next three months, up 3 percentage points. Still, those labor metrics had been largely falling this year.

©2024 Bloomberg L.P.