This Week's Economic Roundup
Faced with growing uncertainties in the housing and financial markets, the nation's small-business owners are keeping a positive outlook for the months ahead, even as many are cutting back on hiring plans. Here's a look at this week's economic developments and how they may affect your business.
Owner Optimism Strong
Small-business owners are shrugging off trouble in the housing and financial markets and keeping a positive outlook for the months ahead, PNC Bank reported Thursday.
In a survey of more than 1,200 small-business owners nationwide, 87 percent said credit availability was the same or better than three months ago, the Pittsburgh-based bank said. While 43 percent of respondents said they expected housing values to decline, less than a quarter felt it would have a negative impact on sales and profits.
"Small-business owners are not yet ringing the recession bell," Stuart Hoffman, the bank's chief economist, said in a statement. He said the survey results pointed to slow by sustained economic growth over the next few months.
Non-farm private-sector payrolls grew by 58,000 last month, led by new jobs at small and midsize businesses, ADP reported Wednesday.
According to the Roseland, N.J.-based payroll firm, businesses with fewer than 50 employees accounted for 53,000 of all new jobs in September, while midsize business added 31,000 and larger businesses lost 26,000.
Gains in service-sector employment, which grew by 97,000, were offset by continued declines in the manufacturing sector, which shed 39,000 jobs. Jobs losses were particularly heavy at construction and financial firms, which were rocked by problems in the mortgage and housing markets, the report said
On Monday, OPEN from American Express reported that hiring plans by smaller employers have dropped to their lowest point in seven years. In a nationwide survey of more than 600 small-business owners, only 31 percent said they were planning to hire full or part-time staff within the next six months, down from 34 percent in the same period last year.
Despite the decline in hiring plans, 57 percent said of respondents said they were willing to take on risk in order to grow their business, while 37 percent cited growing their business at their company's main priority, the survey found.
"It says a lot about the attitude of small-business owners that they remain optimistic in the face of this difficult environment," Susan Sobbott, president of OPEN from American Express, said in a statement.
Pending Home Sales Down
Mortgage problems cut into pending homes sales in August, which fell by 6.5 percent, the National Association of Realtors reported on Tuesday.
Pending home sales, which are based on signed sales contracts, were 21.5 percent below the same period last year. According to Lawrence Yun, the trade group's senior economist, more than 10 percent of sales contracts in August fell through at the last moment, primarily as the result of cancelled loans.
"Fewer contracts were being written because of mortgage availability issues," Yun said in a statement. He said the problem has since become less severe and that home sales in the fall will better reflect market conditions.
Gas Prices Retreat
After rising steadily in recent weeks, average gas prices fell by 2.4 percent to $2.788 per gallon as of Oct. 1, the Energy Information Administration reported Wednesday.
Prices dropped in every region except the West Coast, where they rose by 1.3 cents to a nationwide high of $2.922 per gallon.
Despite the declines, gas prices were still 47.8 cents higher than during the same period last year.
Jobless Claims Rise
The number of new claims for unemployment benefits rose by 16,000 last week to 317,000, the Labor Department reported Thursday.
The adjusted insured unemployment rate for the previous week was unchanged at 1.9 percent, with a total of 2.541 million people filing claims.
The largest increases in new claims last week were in Florida, Wisconsin, and Kansas, while the largest decreases were in Georgia, South Carolina, and North Carolina.