July 14, 2005--In what could prove to be a positive sign for small businesses, retail sales were up 1.7% in June, the Commerce Department said Thursday. Two additional reports from the Department of Labor showed that inflation remained constant in June while the number of first time unemployment insurance claims last week shot up by 16,000.

While much of the growth in retail sales came thanks to "employee-discount" promotions touted by big car manufacturers, other sectors showed notable improvement, including department stores, general merchandise stores, and warehouses. Bill Rossi, a Professor of Entrepreneurship at the University of Florida, said that the 5.2% jump in car sales suggested that smaller firms in other industries should see a sales boost in the near future. "People are buying cars because they have a lot of discretionary income," he said. "I don't see that changing anytime, the fundamentals of the economy are pretty strong."

Despite the increase in unemployment claims, the less volatile four-week moving average was virtually unchanged at 320,750. Rossi said that the mediocre unemployment report should not be a cause for concern among entrepreneurs, adding that the unemployment data more closely reflects the hiring practices of large companies and should matter less to smaller firms. "There has not been a better time that I have known for an awful long time to either start or extend a small business," he said.

The consumer price index did not change in June, following a slight decrease in May of 0.1%. The apparent lack of inflation has been fuelled largely by modest decreases in energy prices, which fell 2.0% in May and 0.5% in June. The Labor Department's energy index is up 14.1% for the first half of 2005.