Confidence among U.S. small businesses improved in July to its second-highest level in a year as managers became less pessimistic about sales.
The National Federation of Independent Business's optimism index increased to 94.1 last month from 93.5 in June. A May reading of 94.4 matched the highest since April 2012. Six of the measure's 10 components contributed to the rise, the Washington- based group said.
The net share of business owners expecting sales to increase rose by 2 percentage points to 7 percent in July. That was still short of the average during the previous expansion of 21. More companies also said it was a good time to expand.
At the same time, the number of companies planning to increase their inventories was little changed from the month prior. There was more pessimism about the outlook for the economy, as a gauge of expectations about business conditions fell for the first time since November.
"Sales for small businesses, especially at service firms, continue to languish," William Dunkelberg, the group's chief economist, said in a statement. Plans to create new jobs improved "in spite of pessimistic views of future sales growth, but were still historically low, not typical of periods of economic growth."
The NFIB report was based on a survey of 1,615 small- business owners through July 30. Small companies represent more than 99 percent of all U.S. employers, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise with no more than 500 employees.