This Week's Economic Roundup
Despite the continued strength of the labor market, small-business owners and consumers alike remain wary of the long-term outlook for the economy. Here's a look at this week's economic developments and how they may affect your business.
Owner Confidence Slips
After months of sharp declines, confidence among small-business owners in the economy held steady in May, Discover reported Tuesday.
Based on a survey of 1,000 small-business owners nationwide, Discover's monthly small-business confidence index slipped by less than half a percent to 110, following a seven-point drop in April.
Thirty-four percent of owners polled in May said they felt economic conditions were getting worse, up from just 32 percent the previous month, while 41 percent reported cash-flow issues over the past three months, up from 40 percent. Given the expected, 31 percent of respondents said they planned to spend less on business development in the months ahead, compared to 29 percent in April.
Small Businesses Adding More Jobs
The number of private-sector jobs at small businesses nationwide rose by 58,000 to nearly 50.6 million, Automatic Data Processing reported Thursday.
By comparison, midsize and large businesses created 39,000 jobs, the Roseland, N.J.-based payroll-services firm said. The report defines small businesses as those with fewer than 50 employees.
Over the past year, small businesses have contributed 863,000 new jobs out of a total 1,436,000 across all private-sector industries and market sectors, the report said. Of these, 818,000 were in the service sector, while 45,000 were in the goods-producing sector.
The results mark the sixth straight month that small business have accounted for the largest gains in job growth, researchers said.
At the same time, the number of jobs posted online rose by 9,000 in May to 4,374,400, an increase of 0.2 percent from April, the Conference Board reported Wednesday. Online job vacancies were up 29 percent from the same period last year, the New York-based private research group said.
The gains are the result of an ongoing boom in health care, IT, business management, and other industries and occupations that advertise heavily online, according to Gad Levanon, a Conference Board economist.
Consumer Confidence Rebounds
The more positive view of current economic conditions helped boost consumer confidence in May, though the long-term outlook remains mixed, the Conference Board reported on Tuesday.
Based on a survey of 5,000 households nationwide, the research group's consumer confidence index rose to 136.1 from 133.5 in April. The number of respondents describing present-day conditions as "good" rose to 29.4 percent from 27.5 percent in April, while those describing conditions as "bad" was unchanged.
Despite the gains, the number of respondents who felt conditions would worsen over the next six months rose to 10.1 percent from 9.7 percent, the report said.
"The short-term outlook remains cautious, and rising gasoline prices are having a negative impact on consumers' inflation expectations," Lynn Franco, the group's director of consumer research, said in a statement. Franco said the results suggest slower growth in confidence levels in the months ahead.
Construction Spending Up
Construction spending rose by 0.1 percent in April to a annual rate of $1,190 billion, the Commerce Department reported on Thursday.
Despite the gains, construction spending was 2 percent below the same period last year, the report said.
Private residential construction projects in May accounted $563 billion of total spending, down 1 percent from March, while spending on non-residential projects rose 1.5 percent, the report said.
Gas Prices Dip
After rising for four consecutive weeks, average gas prices dropped by 0.9 percent to $3.209 per gallon this week, 34.2 cents higher than the same period last year, the Energy Information Administration reported Thursday.
While prices were down in the Midwest, Gulf Coast, and West Coast regions, they continued to rise in the East Coast and Rocky Mountain regions, the report said.
Despite dropping by 2.9 cents this week, prices in California remained the nation's highest at $3.407 per gallon, 14.1 cents above last year.
Jobless Claims Fall
The number of new claims for unemployment benefits fell by 4,000 last week to 310,000, the Labor Department reported Thursday.
For the week ending May 19, the seasonally adjusted insured unemployment rate was 1.9 percent, unchanged from the previous week, with 2.472 million people filing jobless claims.
The biggest declines in new claims last week were in Oregon, Wisconsin, and Tennessee, while the biggest increases were in North Carolina, Missouri, and Arkansas.