Further signs of slower growth ahead are putting a damper on small-business optimism, even as retail sales are looking up. Here's a look at this week's economic developments and how they may impact your business.

Optimism Sags

After months of resilience, weaker sales and rising labor costs in August put small-business owners in a sour mood, according to the National Federation of Independent Business, a Washington-based lobby group.

Just 22% of small businesses surveyed nationwide reported higher earnings in August, with more owners citing declining sales and costly labor, the group said Tuesday. About a quarter of the group's 600,000 members generally respond to its monthly surveys.

The number of owners who raised wages in August rose to 25%, with 12% citing the availability of qualified workers as their chief concern, the survey reported.

At the same time, those expecting sales to pickup fell eight points from July to just 18%, the survey found.

Over the past six months, the number of small businesses reporting capital outlays -- on such things as new equipment, vehicles, and expanded facilities -- has flattened out to about 60%, with the spending plans for coming months dropping to 28% in August, the survey found.

William Dunkelberg, the group's chief economist, described the latest results as signaling a "slowdown in the works." He said the sagging optimism of the nation's small businesses could see economic growth slow to the low 2% range in the first quarter of 2007.

Trade Gap Widens

On Tuesday, the Commerce Department reported a 5% gain in the U.S. trade deficit to a record-high $68 billion in July, compared to $64.8 in June.

The widening spread in July was blamed on rising imports and declining exports, which led to a trade gap with China alone of $19.6 billion, the report said.

Retail Sales Gains

Despite a 1% decline in gasoline sales, overall retail sales inched up in August by 0.2% to $368.2 billion, the Commerce Department said Thursday.

Excluding motor vehicles and parts sales, which jumped by 0.4% alone, retail sales still rose 0.2% over July, the report said.

While sales at electronics and appliances stores rose by 0.1%, sales at furniture stores and clothing outlets fell by 0.3%, the report said.

Still, other strong gains were reported at restaurants and bars, health and personal care stores, and leisure-time goods stores, according to the report.

Jobless Claims Down

New claims for unemployment benefits fell by 5,000 to 308,000 in the week ending Sept. 9, the Labor Department reported Thursday.

The declines knocked 1,500 claims off the four-week moving average, which dropped to 314,250, the report said.

The largest decrease in new claims were in New York, Kentucky, and California, while the most new claims were reported in Louisiana, Illinois, and Michigan, the report said.

Published on: Sep 14, 2006