This Week's Economic Roundup
Unfazed by further signs the central bank will raise lending rates later this month, the nation's small businesses continued hiring new workers, while warmer weather brought shoppers into stores. Here's a look at this week's economic developments and how they may impact your business.
Rate Hike Looming
Rising prices for consumer goods and services this year led Ben Bernanke, chairman of the Federal Reserve, to express open fears of inflation on Monday.
"Core inflation measured over the past three to six months has reached a level that, if sustained, would be at or above the upper end of the range that many economists, including myself, would consider consistent with price stability," Bernanke told other central bankers at a conference on monetary issues in Washington.
The remarks, which prompted a downward turn on the Dow Jones, NASDAQ, and other stock markets, hinted at another boost in central bank lending rates at the end of the month, analysts and investors said.
Speaking of lagging gains in payroll employment and an ongoing rise in unemployment claims, Bernanke called the trends "consistent with the softening in the pace of overall economic activity that seems to be under way."
Yet, responding to reports of weak labor demand, William Dunkelberg, the chief economist of the National Federation of Independent Business, said recent surveys of the nation's small-business sector tell a different story.
"The net percent of owners planning to increase employment has been historically high for a year now, exceeded only by dot-com numbers, driven by business expansion supported by strong growth," Dunkelberg said in a statement on Wednesday.
In April, fully half of 150,000 small-business owners polled reported hiring or trying to hire at least one new worker, the Washington-based group's latest survey showed.
"We've seen weak labor markets in the 32-year history of the NFIB small-business economic reports, and this doesn't look like one," Dunkelberg said.
Jobless Claims Down
Last week, new jobless claims fell by 35,000 to 302,000, the Labor Department reported on Thursday.
The declines dragged the four-week average for new claims down by 5,750 to 327,750. the department said.
Store Sales Rising
At the same time, sales at U.S. chain stores inched up by 0.1% after falling by a full 1% the previous week, the International Council of Shopping Centers and UBS Securities reported on Tuesday.
Year-over-year, sales have grown by 3.4%, the report said.
The gains last week were spurred by warmer weather across the country, according Michael Niemira, ICSC's chief economist. Sales for June are expected to increase by as much as 3% over the same period last year, the report said.
Sales at merchant wholesalers also rose, by 1.3% in April over the previous month, the Commerce Department said on Thursday.
While sales of durable goods declined by 0.3%, sales of non-durable goods, led by petroleum and petroleum products, grew by 2.9%, the report said.