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This Week’s Economic Roundup

Small-business optimism slides; retail sales and industrial production post gains.
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Despite gains in sales and profits, small-business owners' outlook on the economy darkened last month, while stores, restaurants, and industrial producers saw business picking up. Here's a look at this week's economic developments and how they may impact your business.

Owner Optimism Flagging

The mood among the nation's small-business owners unexpectedly soured in March, even as sales and profit trends remained strong, the National Federation of Independent Business reported Tuesday.

A downturn in job-creation plans and openings, along with lower sales expectations and a more pessimistic outlook on general business conditions, dragged the Washington-based lobby group's monthly optimism index down 3.5 points to 98, two points below its 30-year average.

The index is based on survey results from about a quarter of the group's 600,000 small-business owners nationwide.

"Something spooked small-business owners in March about the future course of the economy," William Dunkelberg, the NFIB's chief economist, said in a statement.

The declines could indicate business owners believe the economy is strong, but not likely to get any stronger, Dunkelberg said.

Just 24% reported plans to create new jobs over the next three to six months, while only 31% were planning capital expenditures -- less than quarter described the current period as a good time to expand, the survey showed.

On the other hand, a full 27% reported higher sales and lower inventories in March, the report said.

By contrast, consumer optimism earlier this month was on the rise, according to a report by University of Michigan on Thursday.

The university's monthly consumer sentiment index climbed to 89.2 from 88.9 in March, the report said.

Sales, Production Gains

Retail and food-service sales across the nation reached $361 billion in March, an increase of 0.6% over February and up 7.9% from the previous year, the Commerce Department reported Thursday.

Led by sales of building material and garden equipment and supplies, which rose by 17.9% over March 2005, retail trade sales were up 0.7% from February, the report said.

The results were based on a survey of some 5,000 stores, restaurants, and other outlets nationwide.

Industrial production was also on the rise in March, gaining 0.6% over February and 3.6% ahead of the same period in 2005, the Federal Reserve reported Friday.

Industries posting gains last month included fabricated metal products, machinery, and computer manufacturers, the report said.

Higher Prices at the Pump

Gas prices this summer are expected to be 25 cents higher than last year, hovering around $2.62 a gallon, the Energy Department said Tuesday.

The higher prices were blamed on heftier crude oil prices and a growing demand at the pumps, the department said.




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