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This Week's Economic Roundup

Super Bowl snacks send retail sales higher; service sector continues to expand.
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Colder weather and the Super Bowl gave retailers a boost last week, while service-sector growth continued to outpace manufacturing amid a downturn in the labor market. Here's a look at this week's economic developments and how they may impact your business.

Service Sector Growing

Despite a slowdown in new orders and employment, the nation's service sector continued to expand in January -- the 46th consecutive month of growth, according to a report released Monday by the Institute of Supply Management, a Tempe, Ariz.-based trade group.

Based on a survey of more than 350 supply and purchasing managers, the group's monthly non-manufacturing index rose to 59 last month from 56.7 in December, the report said. Index readings over 50 indicate expansion.

While business activity and production across the sector rose 2.3 points to 59, the index for new orders dropped 0.2 points to 55.4 and employment fell 1.5 points to 51.7, the report said.

The top performing industries last month were utilities, transportation and warehousing, and professional, scientific, and technical services, the report said.

"The overall indication in January is continued economic growth in the non-manufacturing sector at a faster pace than in December," Anthony Nieves, the head of the group's survey committee, said in a statement.

Chain Store Sales Up

A combination of colder weather and the Super Bowl lifted weekly retail sales by 1.3 percent in the week ending Feb. 3, the International Council of Shopping Centers said Tuesday.

The gains were driven by grocery-store sales as football fans stocked up on snacks, according to Michael Niemira, the group's chief economist.

Labor Costs Rising

While labor costs grew at a slower pace in the fourth quarter of 2006, costs for the year rose to a six-year high, the Labor Department reported Wednesday.

Following a 3.2 percent increase in the third quarter, unit labor costs rose by 1.7 percent over the October-December quarter, while hours worked rose 1.2 percent and output by 4.2 percent, the report said.

The gains also led to a 3 percent boost in productivity, the report said.
On the year, unit labor costs rose 3.2 percent, the sharpest increase since 2000, while productivity was up just 2.1 percent, the report said.

Labor costs, a closely-watched gauge of inflation, account for up to two-thirds of overall business costs.

Wholesale Inventories Down

Amid a 1.8 percent increase in sales, inventories at the nation's merchant wholesalers dropped by 0.5 percent in December, the biggest decline since May 2003, the Commerce Department reported Thursday.

Despite the declines, inventories rose 8.8 percent on a year-over-year basis, following a 7.1 percent increase in 2005, the report said.

The gains in December sales were led by petroleum, cars, groceries, chemicals, and hardware, among other goods, the report said.

Jobless Claims Up

The number of new claims for unemployment benefits rose by 3,000 to 311,000 in the week ending Feb. 3, the Labor Department reported Thursday.

The adjusted seasonally insured unemployment rate the previous week was unchanged at 1.9 percent, with about 2.49 million people drawing jobless claims, the report said.

The largest increase last week was in California, Texas, and New Jersey, while the largest decreases were in Michigan, Kentucky, and Washington, the report said.




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