This Week's Economic Roundup
A tighter labor market has many small-business owners gripped by inflation fears, while soaring energy costs have already jacked up prices for producers and consumers alike. Here's a look at this week's economic developments and how they may impact your business.
Inflation Fears Grow
Across the nation, small-business owners are facing the toughest pressure to raise prices since the 1970s, according to the National Federation of Independent Business, a Washington-based lobby with more than 600,000 members.
"The momentum appears to be building and once inflation gets legs, it's hard to slow the pace," William Dunkelberg, NFIB's chief economist, said in a statement Wednesday.
About 35% of more than 150,000 business owners reported raising average selling prices in April, compared to just 7% that lowered them, according to a recent NFIB survey.
Prices were on the rise across most industries, especially at construction firms and retail outlets, the survey showed.
The price hikes were blamed on ongoing strengths in sales and the labor market, along with rising energy costs, a weakening dollar and greater demand in the export market, among other factors.
The group's survey results were confirmed by a 0.6% rise in the U.S. consumer price index in April, following a gain of 0.4% in March, the Labor Department reported Wednesday.
Buoyed by soaring energy prices, which jumped by 3.9%, the monthly index reached its highest point since a 0.7% increase in January. Over the last year, prices rose by 3.1%, the department said.
Excluding energy and food, so-called core prices rose by 0.3% for the second straight month, the report showed.
While new car prices dropped by 0.1%, shelter, apparel, transportation, medical care, and recreation costs were all higher in April.
Higher energy costs also lifted producer prices in April by 0.9%, according to a separate Labor Department report on Tuesday. Core prices for finished goods, excluding energy, were up just 0.1%, the report said.
Leading Indicators Down
In a sign of slower growth ahead, the index of leading economic indicators, which gauges the economic outlook in coming months, dipped by 0.1% in April after rising 0.4% in March, the Conference Board said Thursday.
Just three of the board's 10 key indicators saw improvements in April, including vendor performance, stock prices, and interest rate spread, the report said.
On the downturn were building permits, manufacturers' new orders for both nondefense capital goods and consumer products, consumer expectations, weekly initial claims for unemployment insurance, and real money supply.
Since October, the leading index has gained 1.5%, the board said.
The board's coincident index, which measures current activity, rose by 0.2% in April, following similar gains in March and February, the report showed.
Housing Market Cools
New residential construction continued to fall in April, the Commerce Department reported on Tuesday.
Building permits dropped by 5.4% for privately-owned housing units and 4% for single-family homes from March, the department said.
Also down were housing starts and housing completions in April, the report showed.
Jobless Claims Rise
New applications for jobless benefits jumped by 42,000 to 367,000 last week, the Labor Department said Thursday. Some of those gains were due to a funding crisis in Puerto Rico that has knocked several thousand government employees out of work, the department said. Overall, some 2.39 million Americans are receiving unemployment checks, department figures showed.