WASHINGTON (Reuters) - The
U.S. economy has decisively turned the corner with small
business confidence hitting its highest level in more
than 6-1/2 years in May and the number of jobs available
rising to pre-recession levels in April.
The brightening growth picture was further boosted by another report
on Tuesday showing a bigger-than-expected increase in wholesale
inventories. The new figures added to employment, auto sales,
manufacturing and services sector data in suggesting the economy was
now in a full-fledged expansion.
"The list of indicators showing the economy is back continues to get
longer every day," said Chris Rupkey, chief financial economist at
Bank of Tokyo-Mitsubishi UFJ in New York. "It's getting harder and
harder to point to slack in economic conditions."
The National Federation of Independent Business said its Small
Business Optimism Index rose 1.4 points to 96.6 last month, the
highest reading since September 2007.
It was the third straight monthly increase in the index, which is
viewed as one of the leading indicators of economic growth. Five of
the index's 10 components advanced, with big gains in sales and
earnings expectations.
Small businesses were also very upbeat about prospects over the next
six months. There were increases in both the share of business
owners planning to create new jobs and those who believed this was a
good time to expand.
In a second report, the Labor Department said job openings, a
measure of labor demand, increased by 289,000 to a seasonally
adjusted 4.46 million in April, the highest reading since August
2007.
Federal Reserve Chair Janet Yellen and other policymakers at the
U.S. central bank are watching job openings to help gauge the health
of the labor market. The Fed is winding down a stimulative
bond-buying program and eyeing a possible hike in interest rates
sometime next year.
JOBS AVAILABLE
"Jobs are available. The economy is creating jobs at a fairly robust
pace and there is every indication that will be sustained," said
Millan Mulraine, deputy chief economist at TD Securities in New
York.
With job openings increasing, there were 2.19 people for every
available job in April, the lowest since June 2008.
"This is almost exactly in line with the average from 2000 to 2006,"
said Cooper Howes, an economist at Barclays in New York. "This
suggests that there is little slack remaining in labor markets and
that wage growth will be stronger."
The Fed, which has kept overnight interest rates near zero since
December 2008, has pointed to labor market slack to justify its very
accommodative monetary policy stance.
Despite the rise in job openings, hiring was little changed in
April, a potential suggestion that employers are having trouble
finding the workers with the right skills for the jobs available.
In a sign of confidence in the labor market, the number of people
quitting their jobs rose.
In another report, the Commerce Department said wholesale
inventories increased 1.1 percent after advancing by the same margin
in March.
The component that goes into the calculation of GDP - wholesale
stocks excluding autos - also increased 1.1 percent, bolstering
views that inventories will buoy growth this quarter.
The economy contracted at a 1.0 percent annual pace in the
January-March period. Growth this quarter is forecast topping a 3.0
percent pace.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
