This Week's Economic Roundup
Amid rising gas prices and more signs of trouble in the housing market, strong job and revenue growth are keeping small-business owners in a buoyant mood. Here's a look at this week's economic developments and how they may affect your business.
Business Owners More Optimistic
Strong job and income growth lifted small-business optimism in the second quarter close to the record-high level achieved at the end of last year, Wells Fargo reported on Thursday.
Based on interviews with 600 owners nationwide, the San Francisco-based lender's quarterly small-business optimism index rose to 113, one point below an all-time high of 114 during the fourth quarter of 2006.
All six index components made gains in the second quarter, including revenues, capital spending, and hiring, among others.
Sixty percent of respondents reported feeling "satisfied or very satisfied" as small-business owners, up from 50 percent in the previous quarter.
"Despite fears that higher gasoline prices would weaken small-business demand, steady job and income growth have helped sustain robust revenues and cash flows for small businesses," Scott Anderson, Wells Fargo's senior economist, said in a statement.
Online Sales Growing
Online sales at U.S. retailers rose by 3 percent to $31.5 billion over the first quarter, nearly doubling the pace of total retail sales, the Commerce Department reported Wednesday.
Online retail sales were up by 18.4 percent from the same period last year, compared to just 3.2 percent for total retail sales, the report said. Over the first quarter, online sales accounted for 3.2 percent of the $999.5 billion in total retail sales, up from 3.1 percent over the previous quarter.
For the first time, clothing outpaced computer sales online, with online shoppers spending $18.3 billion on apparel, accessories, and footwear last year, Shop.org reported on Monday. Online computer sales totaled $17.2 billion, followed by cars and auto parts at $16.7 billion, the report said. Total online retail sales are expected to grow by 18 percent to $259.1 billion, the report said.
Consumer Prices Hold Steady
Despite rising gas prices, overall consumer prices rose just 0.4 percent in April, a slower pace than in recent months, the Labor Department reported Tuesday.
Excluding energy and food prices, so-called core consumer prices rose 0.2 percent, the report said. Since last April, core prices have climbed by 2.3 percent.
Prices for clothing, cars, and computers were all down last month, while energy prices jumped by 2.4 percent.
Gas Prices Rise Again
Prices at the pumps rose by 4.9 cents to 310.3 cents per gallon in the week of May 14, the third straight week of increases, the Energy Information Administration reported Wednesday.
Apart from a slight decrease in California, gas prices were up in all regions, including a hike of 10.3 cents to 319.3 cents per gallon in the Rocky Mountain region. Though dropping by 1.1 cents, prices in California remained the nation's highest at 345 cents per gallon, a full 12 cents above the same period last year.
Building Permits Drop
Despite starting more projects, fewer homebuilders sought new construction permits in April, the Commerce Department reported Wednesday.
The number of building permits for privately-owned homes fell by 8.9 percent from March to an annual rate of 1.429 million, 28.1 percent below the same period last year, the report said.
At the same time, the number of housing starts picked up by 2.5 percent to an annual rate of 1.528 million homes. Despite the gains, housing starts were 16.1 percent below April 2006, the report said.
Housing completions were down by 5.8 percent from March.
Jobless Claims Down
The number of new claims for unemployment benefits fell by 5,000 last week to 293,000, the Labor Department reported Thursday.
The advanced insured unemployment rate remained steady at 1.9 percent for the week ending May 5, with 2.473 million people filing jobless claims.
The biggest decreases in new claims last week were in New Jersey, Connecticut, and California, while the biggest increases were in Kentucky, Kansas, and Tennessee.