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The Economy This Week

Higher costs force small firms to raise prices; retail sales get a seasonal boost.
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Citing inflation as their biggest concern, more small-business owners raised prices last month to offset higher costs and weaker sales. Here's a look at this week's economic developments and how they may affect your business.

Owners Raising Prices

More small-business owners were raising prices in April to counter weaker sales and higher costs, sparking renewed fears of inflation, the National Federation of Independent Business reported Tuesday.

Based on a survey of its members nationwide, the Washington-based lobby group's monthly small-business optimism index rose by nearly two points last month to 91.5, below its benchmark level of 100. Seven of ten index components improved in April, including plans to increase employment, spending and inventories in the months ahead.

Despite the gains, the number of owners citing inflation as their biggest concern in April rose to its highest level since 1982.

"Recession fears are spreading and the economy is showing definite signs of slowing, even on Main Street," William Dunkelberg, the group's chief economist, said in a statement. He said price increases last month were not enough to counter weak earnings and "backdoor inflation" from higher compensation costs. Dunkelberg called the trend a "bad-news environment" for profits.

On Wednesday, the Labor Department reported a 0.2 percent increase in consumer prices in April, down from 0.3 percent in March.

Retail Sales Up

Excluding cars, retail sales rose by 0.5 percent in April to $378.1 billion, the sharpest month-to-month increase since November, the Commerce Department reported Tuesday.

Despite a two percent gain from a year ago, overall retail sales fell by 0.2 percent from March on a 2.8 percent decline in car sales, the report said.

The National Retail Federation said spring weather brought shoppers back to stores after months a flat growth. Sales of building materials and garden supplies last month rose by 1.9 percent. Increases were also reported at health, sports and music stores.

Jobless Claims Rising

The number of new claims for unemployment benefits rose by 6,000 last week to 371,000, the Labor Department reported Thursday.

The seasonally adjusted insured unemployment rate the previous week was unchanged at 2.3 percent, representing about 3.06 million people filing jobless claims.

The largest increases in new claims last week were in New York, Pennsylvania, and Wisconsin. Declines were reported in Massachusetts, New Jersey, and Georgia.




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