Economy, Small Business

Economic Data Roundup (06/14/2016)

6/14/16 12:00 PM

iStock_000009946822_Small.jpgThere were two important reports on the U.S. economy released this morning. First, the National Federation of Independent Business’s (NFIB’s) small business optimism index ended May at 93.8. This is a relatively small increase from April’s 93.6 print but still a better headline reading than most economists had expected. Four of the ten main components that make up the sentiment index improved last month, with the biggest gain being found in owners’ overall economic outlook. Measures of employment conditions were mixed in May as job creation and the number of vacant positions both declined but hiring plans increased. Further, more owners reported “few or no” qualified applicants for job openings last month, and wage growth accelerated. At the same time, the net percent of owners raising prices remained near zero, indicating that additional labor costs are not yet being passed on to customers and therefore potentially straining margins at the moment. Elsewhere in the report, the top two problems facing surveyed small business owners were once again taxes and government regulation but “quality of labor” continues to be a growing challenge. Owners were also worried about poor sales in May, which is worth monitoring going forward because such concerns often lead unemployment. Bill Dunkelberg, NFIB’s chief economist, added that “We can’t get “3%” growth without an empowered small business sector and right now we don’t have one. Obamacare, the avalanche of regulations (federal, state and local), taxes, and a management team in Washington that can’t get anything done insure mediocre growth which to a significant degree depends on population growth, not under the control of our politicians.”



Elsewhere, a report from the Census Bureau showed that advance estimates of retail and food services sales for May totaled $455.6 billion, an increase of 0.5 percent from April and better than expected. This solid headline gain, though, was again driven by large increases in sales at motor vehicles/parts dealers and gasoline stations. However, core retail sales, which exclude the volatile autos and gasoline components, still rose by a healthy 0.4 percent in May, albeit half the gain seen in April. One clear negative in the report is that building materials, garden supplies, and furniture sales have experienced their worst 3-month drop since 2012. On the bright side, consumer discretionary spending seems to have picked up as there were marked increases in sales at clothing stores as well as sporting goods and other hobby-related retailers. Further, U.S. restaurant sales are up 23 percent over last three years. Only other time that happened in the past two decades was 2003-2006. Also of interest are sales at nonstore retailers, e.g. Amazon, which jumped by 1.3 percent last month and this segment accounted for more than 10 percent of total retail sales in America in May, a new record. Stuart Hoffman, chief economist at PNC Financial, added that “This is a very strong spring quarter for consumer spending. It adds to evidence that the economy is bouncing back pretty solidly.”





Sources: Econoday, Twitter, Bloomberg, ZH, NFIB, U.S. Census Bureau, FRBSL

Post author: Charles Couch