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This Week's Economic Roundup
 

More business owners expect economy to improve in months ahead; trade gap with China widens.
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Despite signs of slower growth in the months ahead, stronger sales and earnings have small-business owners in a better mood. Here's a look at this week's economic developments and how they may impact your business.

Business Owners More Optimistic

Favorable earnings, higher sales, and strong job-creation plans gave small-business owners a brighter outlook on the economy in September, the National Federation of Independent Business reported on Tuesday.

In a survey of about 500 small-business owners nationwide, just over half said they expect the economy to improve in the months ahead, compared to less than half in August, the Washington-based lobby group said.

The group's monthly small-business index for September rose 3.5 points to 99.4, close to its 30-year average of 100, the report said.

Quelling inflation fears, fewer owners in September reported raising average prices, while nearly one in five are planning to create at least one new job over the next three months, the report said.    

The number of owners reporting higher real sales and improved earnings was also on the rise.

The brighter outlook has led to more robust spending plans for new equipment, vehicles, new fixtures and furniture, and expanded facilities, the report said.

"This confirms the slowdown in the economy anticipated in the July survey -- down, but not out," William Dunkelberg, the group's chief economist, said in a statement.

Chain Store Sales Rise

Bad weather and an extra Saturday gave retailers a boost in September, with sales rising 3.8 percent on a year-on-year basis, the International Council of Shopping Centers reported on Tuesday.

While both department stores and apparel stores made strong gains -- except for the Gap, which saw 3 percent decline on the year -- discounters and wholesalers experienced far slower growth, the New York-based trade group said.

The council expects same-store chain sales to rise by up to 3.5 percent in October.

Despite an uptick of 1.1 percent in sales in August, merchant wholesalers continued to struggle with a record-low inventory to sales ratio, the Commerce Department reported on Tuesday.

Sales of furniture, electronics, and other durable goods rose 1.4 percent in August, while paper, drugs, and groceries nudged up by just 0.9 percent, the report said.

At the same time, total inventories rose 1.1 percent to $386.6 billion, enough for 1.15 months at the current sale rate, the report said. The inventory to sales ratio has been declining since a peak of more than 1.30 in mid 2001.

Trade Gap Widens

Driven by a growing trade imbalance with China, The U.S. trade deficit grew by 2.7 percent to a record-high $69.9 billion in August, the Commerce Department reported on Thursday.

The trade gap with China alone widened to $22 billion, compared to $18.5 billion over the same period last year, according to the report. In September, U.S. consumers bought $26.7 worth of Chinese imports, the report said.

Jobless Claims Inches Higher

The number of new claims for unemployment benefits rose by 4,000 to 308,000 in the week ending Oct. 7, the Labor Department reported Thursday.

At the end of September, the seasonally adjusted insured unemployment rate was 1.9 percent, the department said.

The largest increase in new claims were in Kentucky, Indiana, and Pennsylvania, while the largest decreases were in Michigan, New York, and Missouri, the report said.

Last updated: Oct 12, 2006




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