This Week's Economic Roundup
Dec. 8, 2005--As the pace of productivity picks up, the latest reports confirmed that small businesses are seeking quality over quantity when it comes to employment. Here's a look at this week's economic developments and how they may impact your business.
Better Pay, Fewer Jobs
Hiring at small businesses dipped 0.04% last month, according to a nationwide survey of payroll data released Tuesday. November marked the third consecutive month of declines after a run on hiring earlier this year. "Small-business hiring may have reached an inflection point in September," said the report from SurePayroll, a Skokie, Illinois-based payroll processing firm that tracks wages at more than 15,000 small businesses across the country.
At the same time, the report showed, salaries rose 0.3% from October, prompting SurePayroll president Michael Alter to conclude that small business owners are looking to do more with less by emphasizing "quality over quantity."
The total number of job cuts across all sectors of the economy jumped by 22% last month, hitting 99,279 from 81,301 in October, according to Challenger, Gray & Christmas, a global outplacement firm based in Chicago. November was the third month of rising layoffs, and the highest level since July. The increases were blamed on continued downsizing in the automotive sector, which led the month with 16,870 planned job cuts, according to the report released Wednesday.
Slippery Oil Prices
In a weekly report, also issued Wednesday, the Energy Department said supplies of crude oil were up by 2.7 million barrels, an 11% increase over the same period last year. That saw trading prices drop below $60 a barrel, with the price of gas falling to $1.57 a gallon on the oil market. Home heating oil, which the National Federation of Independent Business expects will be a "shocker for many consumers" this winter, continued inching up to $1.77 a gallon.
By Thursday, forecasts of a prolonged cold snap in the Northeast saw crude oil and natural gas prices already creeping back up.
Productivity and Orders Strong
Closing out the third quarter, the nonfarm business sector saw its fastest growth rate in two years, the Labor Department reported Tuesday. Productivity increased at an annual rate of 4.7%, above a revised 4.1% rate last month and 2.1% the previous quarter. The pace of productivity, measured by output per hour worked, has averaged 3.3% annually since 1999.
Factory orders were also on the rise in October, the Commerce Department reported Tuesday. A higher demand for durable goods had orders up by 3.7%, after a 1.4% decline in September. Order for non-durable goods also rose, by 0.5%.
Yet, while factories and manufacturers are hard at work, labor costs are falling, the Labor Department said -- a sign that inflationary pressures are low. The cost in worker wages to produce a unit of output dropped 1% in the third quarter, the department said, though hourly wages have gained 1.2% over the year.