The Economy This Week
Small-business owners and consumer alike are growing increasingly worried about the economy, as the outlook for business conditions and jobs continues to fade. Here's a look at this week's economic developments and how they may affect your business.
Owner Optimism Falls
Optimism among the nation's small-business owners declined last month, with fewer expecting market conditions to pick up in the months ahead, Discover reported Monday.
Out of 1,000 owners surveyed nationwide in October, only 35 percent said they felt conditions for their businesses were improving, down from 40 percent in September. An even fewer number rated the economy as "excellent" or "good."
Discover's monthly small-business confidence index for the month dropped to 96.8 from 99.2 in September, the lowest level since the index was launched over a year ago.
"Optimism among business owners is definitely clouded, and they are exercising increased caution toward business development spending," Sastry Rachakonda, the director of Discover's business card, said in a statement.
Consumer Confidence Drops
A weaker outlook for the labor market, among other conditions, kept consumer confidence levels in October hovering at a two-year low, the Conference Board reported Tuesday.
Based on a survey of 5,000 households nationwide, the New York-based private research group's consumer confidence index for the month dropped to 95.6 from 99.5 in September, marking the third straight month of declines. Both the present situation and expectations components of the index were down last month.
"Consumers are growing more pessimistic about the short-term future and their rather bleak outlook suggests a less than stellar ending to this year," Lynn Franco, the director of the group's consumer research center, said in a statement.
Employment Outlook Mixed
Small and midsize employers continued to boost the nation's sagging labor market in October, adding a three-month high of 106,000 new jobs in October, ADP reported Wednesday.
Businesses with fewer than 50 employees accounted for 63,000 of all new jobs created last month, while midsize businesses added 50,000 and larger firms shed 7,000.
The growing impact of the mortgage market crisis caused employment declines in the residential construction and financial sectors, which cut a combined 17,000 jobs in October.
Overall, employment gains by service-sector businesses offset losses by goods-producers, the report said.
Meanwhile, online job ads dipped by 2.5 percent in October to roughly 4.16 million, representing 2.71 job vacancies for every 100 persons in the labor force, the Conference Board reported Wednesday.
In the past year, online job ads have grown by 8.6 percent, the slowest pace since May 2005, the report said.
"These data suggest that the slow pace in the labor market will continue in the months ahead and is likely to extend into the early months of 2008," Gad Levanon, a Conference Board economist, said in a statement.