Small-business owners are growing increasingly concerned with the economy, despite cheaper energy prices and other signs that inflation will be contained in the year ahead. Here's a look at this week's economic developments and how they may impact your business.
Small-Business Optimism Falls
Fewer hiring plans and a bleaker outlook on the economy are putting small-business owners in a bad mood, the National Federation of Independent Business reported Tuesday.
The Washington-based lobby's monthly small-business optimism index fell 3.2 points in December to 96.5, compared to a benchmark level of 100. Typically, about a quarter of the group's 600,000 members respond to the surveys.
Seven of 10 index components were down last month, including plans to increase employment and capital outlays, current job openings, and the outlook for higher real sales.
"Labor markets ended the year with strength," William Dunkelberg, the NFIB's chief economist, said in a statement. "But it appears the first quarter performance may not be as strong."
As few as 18 percent of respondents said they were expecting higher real sales, down three points from November, while only 20 percent reported higher earnings, the survey found. By contrast, 34 percent reported lower earnings, citing weaker sales and higher labor and material costs.
Trade Gap Narrows
Cheaper imported oil and more exports drove down the nation's trade deficit in November by 1 percent to $58.2 billion, the third consecutive month of declines, the Commerce Department said Wednesday.
On a year-on-year basis, however, the deficit rose 7.5 percent on a year-on-year basis, as Chinese imports alone outweighed exports last year by more than $200 billion, the report said.
The gains in November were led by a 15.7 percent increase in civilian aircraft exports, while agricultural exports fell by 3.7 percent, the report said. Meanwhile, imports were driven by a higher demand for toys and televisions in the U.S. market.
On Monday, Federal Reserve vice chairman Donald Kohn said he expects cheaper energy prices to help contain inflation in the year ahead, though economic growth will be moderate.
Chain-Store Sales Up
Retailers were given a boost by post-holiday shoppers last week, lifting store sales by 0.7 percent, the International Council of Shopping Centers said Tuesday.
On a year-on-year basis, sales rose by 3.4 percent, the sharpest gains since Oct. 14, the trade group said.
Colder weather later this month is expected to raise demand for winter clothing, said ICSC chief economist Michael Niemira.
Wholesale Inventories Rising
Sales at the nation's wholesalers rose 1 percent to $331.3 billion in November, boosting inventories by 1.3 percent to $396.7 billion, the Commerce Department reported Wednesday.
The sales-to-inventory ratio rose to 1.2, the highest in more than a year, the report said.
The gains included a 1.2 percent increase in durable goods sales, and a 0.7 percent in nondurable goods, the report said.
Jobless Claims Fall
New claims for unemployment benefits dropped by 26,000 to 325,000 in the week ending Jan. 6, the Labor Department reported Thursday.
At the end of December, the insured unemployment rate was 1.9 percent, unchanged from the previous week, the report said.
The biggest decreases in new claims last week were in California, Kentucky, and Florida, while the biggest increases were in Wisconsin, Pennsylvania, and Michigan, the report said.
Copyright © 2006 Mansueto Ventures LLC. All rights reserved.