The Quarterly Indicators report provides recent monthly and quarterly data from a wide variety of sources relevant to small businesses. Economic activity of small firms is examined at the national level.
Trends
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The U.S. economy grew 1.6 percent in the third quarter of 2006, down from 5.6 percent in the first quarter and 2.6 percent in the second. The slower growth reflects lower business investment, especially in residential housing. Real personal consumption grew an annualized 3.1 percent during the quarter, up from 2.6 percent the previous quarter. Real imports grew at a faster annualized rate—7.8 percent—than real exports at 6.5 percent. Industrial production fell during the third quarter, but was up for the year.
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Both the National Federation of Independent Business' Optimism Index and the University of Michigan's Consumer Sentiment Survey show that overall confidence in the economy improved. The September NFIB survey also found more small business owners stating that the next three months were a “good time to expand” and hire new workers.
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The unemployment rate in September was 4.6 percent, the same as in June, but lower than in July and August. The economy generated 501,000 net new jobs in the third quarter, with service-producing industries accounting for all of the change. The manufacturing and retail trade sectors lost employment during the quarter, but all other industries saw an increase or no change. Industries with the largest shares of small business employment—construction, other services, wholesale trade, and leisure and hospitality—added 153,200 net new jobs over July levels. Incorporated selfemployment saw a slight decrease in the third quarter, but overall self-employment was higher than a year ago.
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The prime rate increased to an average of 8.3 percent in the third quarter, up 0.4 percent for the quarter and 1.8 percent for the year. Other rates rose similarly. Higher interest rates weakened the demand for small business loans over the year, but the Senior Loan Officer Survey finds more bankers seeing stronger demand than weaker demand for small business loans. Venture capital investment is down from the last quarter.
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Business bankruptcy filings have fallen dramatically since the laws were revised in October 2005. While no figures are yet available for the third quarter, there were 4,100 and 4,900 filings in the first two quarters of 2006. If the trend continues, the number of business bankruptcy filings in 2006 will be significantly smaller than in previous years. A similar fall-off is found in personal bankruptcy filings.
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Inflation remained under control in the third quarter, helped by falling energy prices. The consumer price index rose an annualized 0.8 percent during the quarter, 2.1 percent since September 2005. The average price of petroleum fell $7.07 per barrel between July and September.
The Complete Report (pdf)
Information courtesy of the Small Business Administration.
