Within the light economic news of the week there were some key positives that we’d like to share since they weren’t exactly headline grabbers. The first is that the National Federation of Independent Businesses (NFIB) released its monthly survey of small businesses. The results showed growing optimism within the small business community, and one of the key components of the survey – plans to increase employment – showed a significant gain. This makes five straight months the net percentage of businesses planning to add employees has been in positive territory. This is significant for two reasons: One, small businesses (those with less than 50 employees) represent approximately 45% of private payroll employment in the US according to ADP survey data. Small and medium sized business combined (those with less than 500 employees) account for over 80% of the labor force. Thus, the rising sentiment among this cohort of employers regarding their desire to add staff in the coming months signals a possible upshift in the pace of job creation in the months ahead. The second main reason why the trend in the NFIB survey bodes well for employment is that it corroborates the downward trend in weekly jobless claims we’ve mentioned previously.
The second little nugget of good news is that retail sales were up 1% in February, following the revision upward of January’s number to plus 0.7%. We believe the key takeaway from this report is not just the headline report, but the fact that an in-depth look at the numbers indicates that rising gasoline prices have not dampened consumer sentiment. The three categories that registered declines – furniture, health and personal care, and non-store retailers – are not considered gasoline dependent. All other categories, including autos, clothing, sporting goods, and food services, were in positive territory.
We consider these two pieces of data as further evidence of our solidifying, if slow, recovery.
Next week we will be watching Wednesday’s reports on Housing Starts and the Producer Price Index, and Thursday’s reports on the Consumer Price Index, Jobless Claims, and Industrial production.