GDP report was a bounce back in business investment in new equipment - Wells Fargo

"The Wells Fargo/Gallup Small Business Index rose 11 points to 106 in the third quarter, which marks the highest reading for the survey in more than a decade," said Wells Fargo Research Team on Wednesday.

Key quotes:

"The survey was conducted in mid-July and captures second quarter economic activity. U.S. economic growth rebounded at a 2.6 percent pace during the second quarter, following much slower growth earlier this year. One of the surprises in the GDP report was a bounce back in business investment in new equipment, which rebounded at an 8.2 percent annual rate during the second quarter. That rebound is also apparent in the Wells Fargo Small Business survey, which noted that a larger proportion of business owners felt confident enough about their finances that they are now expanding their business."

"A record 76 percent of small business owners stated their current financial situation is either very good or somewhat good, up from 73 percent in the prior quarter. A large proportion of business owners, 46 percent, continue to report that their revenues have increased over the past year, while the proportion of firms reporting revenues declined fell back to 21 percent and is now even with the all-time series low. The improvement in small business finances and revenues is consistent with what we are seeing and hearing from large public companies this earnings season. Profits and revenues have largely exceeded consensus estimates, amidst stronger overall demand."

"The improvement in small business optimism also likely reflects the lessening of some major headwinds facing small businesses. Energy prices have rebounded, boosting opportunities for small businesses throughout the energy patch, which had been a major source of small business growth earlier in the decade. The dollar has also reversed much of its earlier run-up, which is boosting exports and enhancing pricing power at home. In addition, the onslaught of new regulations has also lessened considerably and, in some cases, even reversed."