This Week's Economic Roundup
Small-business owners are shrugging off troubles in the nation's financial markets and planning to boost employment in the months ahead, even as labor costs continue to climb. Here's a look at this week's economic developments and how they may affect your business.
Owner Optimism Steady
While credit troubles rattled Wall Street, small-business owners remained upbeat about the economy in July, the National Federation of Independent Business reported Tuesday.
In a survey of its 600,000 members, the Washington-based lobby found more business owners last month were planning to boost hiring plans and raise inventory levels in the months ahead. A net 16 percent felt it was a good time to expand, up three points from June, while a net 14 percent were expecting higher sales, also up three points. On the downturn were capital spending and current job openings, the report said.
In all, seven of 10 components of the group's monthly small-business optimism index improved in July, raising the index by 1.6 points to 97.6, below its historic average of 100.
So far, owners appear to be avoiding the fallout from credit woes in the mortgage and private-equity markets, according to William Dunkelberg, the group's chief economist.
"There were no indications of credit stress in July, even in construction," Dunkelberg said in a statement.
Consumer Prices Inch Up
Retreating gas prices kept inflation down in July, with consumer prices increasing by an eight-month low of 0.1 percent, the Labor Department reported Wednesday.
Excluding food and energy prices -- which fell by 1 percent -- core consumer prices rose by just 0.2 percent last month, driven by higher prices for apparel and medical care, the report said. Meanwhile, prices for transportation and recreation continued to decline.
In the past year, core consumer prices have increased by 2.2 percent.
By contrast, wholesale prices rose by 0.6 percent last month, while core prices rose 0.1 percent, the department reported Tuesday. Core producer prices have grown by 2.3 percent in the past year, a two-year high.
Retail Sales Pick Up
Back-to-school shopping lifted this summer's sagging retail sales by 0.5 percent in July, driven by spending on digital music players, laptops, and apparel, the National Retail Federation reported Monday.
Excluding vehicles, gas, and restaurants, retail sales rose by 4 percent on a year-over-year basis, up from a revised 3.8 percent in June, the report said.
"Back-to-school shopping sprees and summer clearance promotions drove consumers to department stores and specialty stores in July," Rosalind Wells, the trade group's chief economist, said in a statement.
Last week, retail tracking firm Retail Metrics reported many stores were falling short of July forecasts. Its same-store sales index rose 2.9 percent last month, propped up largely by gains posted by Wal-Mart and drugstore chains.
Industrial Production Slows
The nation's industrial production rose by 0.3 percent last month, roughly half the pace set in June, the Federal Reserve reported Wednesday.
Gains in manufacturing and mining output in July were offset by a 2.1 percent decline in the utilities sector, the report said.
Despite the slower pace, industrial production was 1.4 percent above the same period last year.
Manufacturing and trade sales dipped by 0.3 percent in June, the Commerce Department reported Monday. Despite slight gains, business inventories were down to enough stock to last little more than a month, the report said.
Gas Prices Keep Falling
The nation's average gas prices dropped by 6.7 cents last week to $2.771 per gallon, the fourth straight week of declines and the lowest prices since early April, the Energy Information Administration reported Wednesday.
Lower prices were reported in every region, including an 8.8 cent decline in California to $2.92.8 per gallon, the first time prices in the area have dipped below the $3 mark.
By region, the lowest prices last week were in Gulf Coast, where prices fell by 6.7 cents to $2.681 per gallon.
Jobless Claims Rising
The number of new claims for unemployment benefits rose by 6,000 last week to 322,000, the third straight week of gains and the highest level in nearly two months, the Labor Department reported Thursday.
For the week ending Aug. 4, the nation's insured unemployment rate was unchanged at 1.9 percent, representing 2.567 million people collecting benefits.
The biggest increases in new claims last week were in Kentucky, Puerto Rico, and New Jersey, while the biggest declines were in California, Michigan, and Tennessee.