This Week's Economic Roundup
Amid growing signs of inflation, small-business owners are earning and spending less, while creating fewer new jobs. Here's a look at this week's economic developments and how they may impact your business.
Owners' Mood Dampens
Fewer job openings and reduced spending plans dragged optimism among small-business owners down in May, the National Federation of Independent Business reported Tuesday.
In its monthly survey of small businesses, the Washington-based lobby found a sharp increase in the number of owners who believed economic conditions were getting worse.
Typically, about a quarter of the group's 600,000 members respond to the surveys.
Only some 28% of those polled reported spending plans over the next few months, while 36% were already raising prices -- up a full point from April, the survey showed.
Both current job openings and plans to increase employment were also on the wane in May, the survey showed.
"It's hard to beat the first-quarter performance, so a slowdown is definitely going to happen," William Dunkelberg, the group's chief economist, said in a statement. "The only question is how far and how fast."
Despite the gloom, economic activity remained strong, Dunkelberg said, with about a third of owners polled reporting higher sales volume, a six-point increase from April.
Yet, even with sales gains and higher selling prices, a full 37% reported lower overall earnings, the survey showed.
Prices on the Rise
Higher energy costs kept nudging up consumer and producer prices in May, a pair of government reports said this week.
So-called core consumer prices -- excluding energy and food -- jumped 0.3% in May, the third straight month of increases, the Labor Department said Wednesday.
Along with gas prices, rising shelter costs led the gains, the department said.
At the same time, core producer prices also rose 0.3%, the department said in a separate report on Tuesday.
While prices for finished goods remained fairly steady, prices for intermediate rose by 1.1% and crude goods by 2% from April, the department said.
In the past year, core consumer prices are up 2.4%, while core producer prices are up 1.5%.
Retail Sales Slow
Amid the price hikes, sales at the nation's retailers inched up by just 0.1% in May, the Commerce Department said Tuesday.
Excluding auto sales, which dropped by 1.6% from April, retail sales rose 0.5%, led mainly by a 1.9% gain at gas stations, the report said.
On the downturn were sales at building and hardware outlets, and furniture stores, the report said.