WASHINGTON, Aug 13 Reuters U.S. smallbusiness confidence jumped to the highest level in nearly 212 years in July, another indication that financial market fears of a recession following last month39;s increase in the unemployment rate were likely overblown.

The National Federation of Independent Business NFIB said on Tuesday its Small Business Optimism Index rose 2.2 points to 93.7 last month, the highest reading since February 2022.

Though businesses continued to worry about inflation, fewer reported raising worker compensation and average selling prices. This bodes well for the inflation outlook. More planned to increase inventory in the coming months, which could provide a boost to gross domestic product.

The report joined a survey last week from the Institute for Supply Management showing a rebound in its nonmanufacturing PMI in easing concerns that the economy was either in recession or on the cusp of a downturn that was triggered by a surge in the unemployment rate to near a threeyear high of 4.3 in July.

Twentyfive percent of owners reported that inflation was their single most important problem in operating their business, up 4 points from June. That, together with policy uncertainty ahead of the presidential election in November, contributed to keeping the NFIB index below the 50year average of 98 for the 31st consecutive month.

Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will…