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In 2011, Google introduced a new ranking factor into its search algorithm – website speed. A fast website will be rewarded in the search results with better ranking.

Plain and simple. Speed helps increase search engine rankings.

From the Google Blog:

You may have heard that here at Google we're obsessed with speed, in our products and on the web. As part of that effort, today we're including a new signal in our search ranking algorithms: site speed. Site speed reflects how quickly a website responds to web requests.

Speeding up websites is important — not just to site owners, but to all Internet users. Faster sites create happy users and we've seen in our internal studies that when a site responds slowly, visitors spend less time there. But faster sites don't just improve user experience; recent data shows that improving site speed also reduces operating costs. Like us, our users place a lot of value in speed — that's why we've decided to take site speed into account in our search rankings. We use a variety of sources to determine the speed of a site relative to other sites.
Google's official statement about website speed
 
Kissmetrics on the importance of speed


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