The Economy This Week
As larger companies continue to shed jobs to offset weaker earnings, small employers hired new workers last month at the sharpest pace this year. Here's a look at this week's economic developments and how they may affect your business.
Small-Business Paryolls Up
The number of jobs at the nation's small businesses grew by 0.2 percent in July, as wages continued to fall, SurePayroll reported Monday.
The monthly gains, which were the sharpest this year, boosted year-to-date employment growth among small businesses to two percent, the Chicago-based payroll firm said.
At the same time, average wages dropped by one percent nationwide, including a 5.4 percent decline at small businesses based in the South. By contrast, employers in the West bucked the national trend, reducing payrolls by 0.1 percent and raising wages by 3.8 percent.
The findings were based on payroll data from over 20,000 small businesses.
Income Growth Eases
With high gas prices cutting into savings, personal income growth eased in June following recent gains, the Commerce Department reported Monday.
Nationwide, personal income grew by just 0.1 percent, down from 1.8 percent in May, the report said. Service-sector employers in June added $9.9 billion to payrolls, down from $16.2 billion the previous month, while goods producers added $1.2 billion.
At the same time, higher prices drove spending up by 0.6 percent, while disposable income declined by 1.9 percent. Measured as a percent of disposable income, the personal savings rate dropped from 4.9 percent in May to just 2.5 percent.
In June, small-business owners cited "backdoor inflation" from rising payroll costs as a top business concern for the first time since the early 1980s, according to the National Federation of Independent Business. A growing number reported higher employee compensation costs as a source of weaker profits, the Washington D.C.-based lobby group said.
Jobless Claims Rise
The number of new claims for unemployment benefits jumped by 7,000 last week to 455,000, the highest level since March 2002, the Labor Department reported Thursday.
While the seasonally adjusted insured unemployment rate the previous week was unchanged at 2.5 percent, last week's gains boosted the four-week moving average of new claims by 26,750 to 419,500, a five-year high, the report said. All told, about 3.311 million Americans filed for unemployment benefits last week.
The largest increases in new claims were reported in Ohio, California, and Illinois, while the biggest declines were in Wisconsin, North Carolina, and Puerto Rico.