This Week's Economic Roundup
As wages continued to rise in April, shoppers with more money to spend faced higher prices at the checkout counter. Here's a look at this week's economic developments and how they may impact your business.
Prices, Wages Rise
Slight gains in wages were met by higher prices in April for everything from software to lawn chairs, boosting overall consumer spending by 0.6%, the Commerce Department said Friday.
Adjusted for inflation, spending rose just 0.1%, the department reported.
While personal income rose 0.5%, rising energy costs pushed consumer prices up by a corresponding 0.5%, the report said.
Tipping the balance, after-tax disposable incomes fell by 0.1%.
Overall, private wages and salaries rose by $50.4 billion in April, compared to $27.3 billion in March. Gains were reported in goods-producing industries, as well as manufacturers and service outlets.
Consumer prices increased by 2.8% during the first three months of the year, according to revised figures for U.S. gross domestic product released Thursday.
Over the first quarter of 2006, GDP -- the output of all goods and services in the U.S. -- rose by 5.3%, compared to just 1.7% in the previous quarter, the Commerce Department said.
The gains are an upward revision to preliminary figures released earlier this month.
New Orders Drop
New orders for aircraft, machinery, computers, and other durable goods fell by 4.8% to $210.2 billion in April, the Commerce Department said Wednesday.
April marked the second straight month of declines in new orders.
As a result, inventories grew by 0.8% over March, with the largest increases reported in computers and electronics manufacturers, the department said.
New Home Sales Strong
Defying a recent downward trend, new home sales remained strong in April, rising 4.9% over March, the Commerce Department said in a separate report Wednesday.
Compared to the same period last year, sales were down 5.7%, following sharp declines earlier this year, the report showed.
There were 565,000 new homes on the market in April, a gain of 2.4% from the previous month, while median prices climbed by 2.8% to $238,500, the department said.
Meanwhile, existing home sales continued to fall, dropping by a full 2% to 6.76 million, the department reported Thursday.
Jobless Claims Fall
New claims for unemployment benefits fell by 40,000 to 329,000 in the week ending May 20, partially reversing a spike in claims caused by massive government job cuts in Puerto Rico earlier this month, the Labor Department said Thursday.
After Puerto Rico, the largest increases were reported in Indiana, North Carolina, and Illinois, the department said.