STRATEGY

This Week's Economic Roundup

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Jan. 12, 2006--Despite a tighter labor market, small-business owners are expecting good times ahead, while wholesalers restock their shelves, bolstered by cheaper import prices. Here's a look at this week's economic developments and how they may impact your business.

Good Help is Hard to Find

Kicking off the new year, the small-business economy is "hot, but not sizzling," the National Federation of Independent Business said Tuesday.

"Things look pretty good for a solidly performing economy in 2006, but it won't break any records," William Dunkelberg, the NFIB's chief economist, said in a statement.

In its monthly optimism index for December, the NFIB, a small-business lobby group based in Washington, D.C., said more business owners were expecting gains ahead in job creation, inventory investment, and capital spending. Typically, about a quarter of the NFIB's 600,000 member businesses nationwide respond to the surveys.

Some 28% saw higher sales in December, with 21% reporting higher earnings, the survey showed. Of these, just 10% attributed the gains to higher selling prices. Overall, those boosting prices dropped to 18%, from 26% in November, possibly signaling a peak in inflation, the report said.

On the job front, the number of owners planning to increase employment jumped two points in December, to 15%. Yet, while hiring plans were solid, current job openings in December slid to 22%, from 24% in November. Just more than half of the businesses polled said they tried to hire workers, with more than eight in 10 saying they had trouble finding qualified applicants -- 9% cited a scarcity of workers in recent months as a "leading business problem," likely to keep upward pressure on wages and, eventually, eat into profits.

All told, the group's optimism index inched up in December, to 101.4, from 101.2 in November.

Restocking the Shelves

Wholesalers replenished inventories at a quicker pace in November, after a series of Gulf Coast storms last year disrupted supplies, the Commerce Department reported Tuesday.

Wholesale inventories rose 0.4% in November, up from 0.2% in October, the department said. Also inching up was the inventory-to-sales ratio, which gauges the amount of time finished goods are warehoused before shipping, rising to 1.15 months from a record low of 1.14 in October.

Meanwhile, cheaper costs for petroleum, steel, and computers, among other goods, saw a 0.2% drop in import prices in December, the Labor Department reported Thursday.

The declines follow a 1.8% decrease in November, the department said.

Holiday Shopping Redux

As consumer began cashing in holiday gift cards, sales at U.S. chain stores jumped 3.7% in the week ending Jan. 7 compared to the same period last year, the International Council of Shopping Centers and UBS Securities reported Tuesday.

According to Michael Niemira, the council's chief economist, about 40% of holiday gift cards and certificates are redeemed in January.

Last updated: Jan 12, 2006




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