Plus: Durable Goods Orders Fall, New Jobless Claims Rise and Global Trade Management Software Does Surprisingly Well.

Small Businesses Face High Regulatory Costs
In addition to facing steeper economic challenges, new research finds that small businesses are also contending with a disproportionately higher share of federal regulatory costs, which may be stifling their potential for future growth.

According to a report from the U.S. Small Business Administration (SBA) Office of Advocacy last week, the total cost of federal regulations on businesses has risen to $1.75 trillion, with the responsibility for these costs falling far more heavily on small businesses than their larger counterparts. Among all firms, the average regulatory cost per employee is $8,086, though businesses with fewer than 20 employees pay an average of $10,585 per worker.

On a per-employee basis, it costs a small business $2,830 more to comply with federal regulations than it does a larger company, which translates into a 36 percent difference in the regulatory burden. The SBA study breaks regulatory expenditures into four categories: economic; environmental; tax compliance; and occupational safety and health. Small businesses pay more than larger businesses in all of these categories except economic regulations.

“The degree to which federal regulations disadvantage small businesses varies across the economy. In some sectors, such as manufacturing, the regulatory cost difference between small businesses and their larger counterparts is particularly acute,” Nicole Crain and W. Mark Crain, economics professors at Lafayette University and co-authors of the study, said in an op-ed for the Wall Street Journal. “Small manufacturers bear compliance costs that are 110 percent higher than those of medium-sized firms and 125 percent higher than large firms’ costs. As much as it is fashionable to blame China for the demise of small manufacturing in America, the evidence suggests that looking for some reasons closer to home is warranted.”

In other small-biz news, Congress last week finally passed a long-delayed bill to help small businesses obtain easier access to credit and provide incentives for economic growth and hiring, the Associated Press reports. The 237-187 House vote cleared the measure for creating a $30 billion federal fund for smaller banks to lend to small businesses and for cutting $12 billion in taxes over the next decade.

U.S. Goods Orders Fall Slower than Expected
Orders for big-ticket items in the United States decreased at a slightly lower rate than expected in August, as new orders for the nation’s manufactured durable goods fell 1.3 percent to $191.2 billion, according to the U.S. Department of Commerce last week. Economists polled by MarketWatch had expected a 1.4 percent decline for durable-goods orders.

“The August report on the demand for long-lasting goods indicates that capital spending continues to be a positive contributor to overall economic growth in the U.S. even as consumer spending and housing demand raise concerns about the strength of the economic expansion,” Manufacturers Alliance/MAPI economist Cliff Waldman wrote in an analysis of the Commerce Dept. report. “While total new orders fell by 1.3 percent, they remain 15 percent above year-ago levels, albeit a comparison to a very weak period. And excluding the volatile transportation component, orders increased by 2 percent and remain nearly 15 percent above 2009 levels.”

Transportation equipment, down three of the last four months, had the largest decrease — 10.3 percent to $46.6 billion — due mostly to a drop in orders for non-defense aircraft and parts, which fell $3.6 billion in August.

“New orders for non-defense capital goods excluding aircraft, a proxy for business equipment spending, continued on its recent volatile path but was 17 percent above year-ago levels, an indicator that there is just enough business confidence about the flow of U.S. and global demand to allow capital spending to sustain a moderate recovery after a deep downturn,” Waldman continued.

Meanwhile, shipments of manufactured durable goods decreased 1.5 percent to $197.9 billion in August after two consecutive monthly increases. Transportation equipment had the largest decrease, falling 5.9 percent to $49.5 billion.

Jobless Claims Rise for First Time in Five Weeks
New initial jobless claims unexpectedly rose in the latest week reported, according to the U.S. Department of Labor. Seasonally adjusted unemployment claims for the week ending Sept. 18 reached a total of 465,000, a 12,000 increase from the previous week’s revised total of 453,000. The increase ended a four-week period of decline and reignited concerns over the troubled state of employment.

Part of the recent fluctuation in jobless claims may be due to a disruption in the government’s data-collection efforts during the Labor Day holiday in early September, according to MarketWatch. Jobless claims typically rise for a brief period following a holiday. However, sluggish economic growth is likely responsible for the long-term trend in unemployment.

“Economic growth has slowed considerably in recent months, and many employers are reluctant to add new employees,” the Associated Press reports. “The economy grew at a 1.6 percent annual rate in the second quarter, an anemic pace that isn’t fast enough to reduce the jobless rate, now at 9.6 percent. Growth in the current July-September quarter isn’t expected to be much faster.”

The lingering jobless rate, which remains well above the threshold of 400,000 that indicates renewed economic health, is raising concerns about structural unemployment problems, meaning that fundamental financial changes, rather than fallout from the economic recession, may be responsible for the ongoing challenges.

“The longer the job market remains stuck in a rut, the stronger the case for arguing that we’re suffering a potent bout of structural unemployment,” economics blog Seeking Alpha explains. “If so, the odds are lower [...] that a new round of monetary and/or fiscal stimulus (assuming they’re tried) will provide any kick to the economy from here on out.”

Global Trade Management Software Does Surprisingly Well
The market for global trade management (GTM) software solutions, which automate trade processes, “did not shrink as much as one might expect” between 2007 and 2009, having declined by a compound annual growth rate of 0.8 percent during the two-year period, according to a new study by analyst firm ARC Advisory Group.

“As trade recovers, the GTM market will recover as well, although we don’t expect strong growth until 2011,” Steve Banker, service director for supply chain management and the primary author of the report, said in an announcement of the findings. “Our five-year forecast through 2014, however, reflects very robust growth.”

However, managing the flow of goods, information and money across borders is becoming a more complex, highly regulated and dynamic process every day.

According to ARC, the following types of content can change daily:

• Global product classification;
• Tax classification;
• Regulatory controls;
• Restricted party screening lists; and
• Documentation.

“There are also challenges associated with advanced electronic notification, calculating total landed costs, integrating GTM into a holistic governance, risk and compliance solution, and other hurdles as well,” Logistics Today reports. “This is why ARC believes the GTM systems market will be one of the fastest growing segments of the enterprise software industry.”