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The Economy This Week

Small-business and consumer outlook improves; private-sector payrolls rebound.
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Improved cash flow is prompting many small-business owners to jumpstart stalled spending plans, while retreating gas prices have consumers breathing a sigh of relief. Here's a look at this week's economic developments and how they may affect your business.

Owner Outlook Improves

Fewer small-business owners reported cash-flow issues in July, raising their confidence in the economy up from record lows in recent months, Discover reported Monday.

In a survey of 1,000 small-business owners nationwide, only 33 percent said they've faced cash-flow problems over the past three months, down from 42 percent last month. That's already prompted many to boost spending plans for the months ahead, the survey found.

"Cash flow is one of the key indicators that affects small-business owners' confidence in the economy," Ryan Scully, director of Discover's business credit card, said in a statement.

Last week, Opinion Research reported a similar upturn in small-business confidence. Roughly half of 500 owners surveyed said they expect the economy to recover within a year, the Princeton, N.J.-based database firm said.

Consumer Confidence Up

Easing gas prices had U.S. consumers in a better mood in July, though their outlook on the job market remains bleak, the Conference Board reported Tuesday.

In a survey of 5,000 households, fewer consumers said they're expecting further declines in business conditions over the next six months, the New York-based private research group said.

Yet, while long-term expectations improved, consumers' appraisal of present-day conditions continued to be dampened by a tougher labor market, with a growing number saying jobs are getting harder to find.

"While consumers remain extremely grim about short-term prospects, the modest improvement in expectations, often a harbinger of economic times to come, bears careful watching over the next few months," Lynn Franco, the group's director of consumer research, said in a statement.

Payrolls Rebound

Following sharp declines, private-sector employment rose by 9,000 new jobs in July, led by gains at smaller firms, ADP reported Wednesday.

While midsized and larger companies continued to shed jobs, businesses with fewer than 50 employees created 50,000, the report said. In June, total private-sector employment declined by 79,000 jobs.

Nearly all of July's gains were in the service sector, which accounted for 74,000 new jobs, while goods producers and manufacturers reported further losses.

"These figures continue to offer evidence of the resiliency small-size businesses have demonstrated over the past several years when compared to the job losses experience at larger firms," Joel Prakken of Macroeconomic Advisers, which produces the report in partnership with ADP, said in a statement.

Last updated: Jul 31, 2008




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