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This Week’s Economic Roundup

Business owners expect higher sales, boosting spending; consumer confidence holds steady.
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March 17, 2006--While retail sales and consumer confidence remain flat, small-business owners are expecting good times ahead -- investing in equipment, vehicles, and facilities. Here's a look at this week's economic developments and how they may impact your business.

Owners Spending

In February, more small-business owners reported plans to increase capital spending, build inventories, and create jobs, according to a monthly survey released Tuesday by the National Federation of Independent Business, a Washington-based lobby group. About a quarter of the group's 600,000 members typically respond to the surveys.

"First-quarter growth will be strong," NFIB chief economist William Dunkelberg said in a statement, calling a jump in higher-average selling prices a concern that might "dampen prospects for a decline in inflation."

Some 28% of the business owners polled last month said they expected higher sales over the next six months, a four-point increase over January, the survey showed. Also up were quarter-over-quarter sales and average selling prices, which gained four points in February to 22% -- equal to the 12-month average number of business reporting higher prices, the study showed.

Increased spending, which rose across all sectors in February, went toward new equipment, vehicles, expanded facilities, fixtures and furniture, and new buildings or land, the survey showed.

Overall, the survey's optimism index gained four-tenths of a point, to 101.5, above its 100 benchmark.

Consumer Mood Unchanged

While the mood of small-business owners continued to brighten, consumer confidence was unchanged earlier in March, a preliminary survey by the University of Michigan reported Friday. The so-called Michigan index put consumer sentiment at 86.7, unmoved from February, as rising gas prices and mortgage rates cut into spending, the survey said.

Sales Down

Retail sales fell 1.3% to $362 billion in February, the Commerce Department reported Tuesday. Building materials and garden equipment made the biggest gains since the same period last year, gaining 20.5%, while gas station sales jumped 17.7%, the report said.

Last updated: Mar 17, 2006




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