Plus: Goods Orders Increase, Unemployment Rate Falls and Worker Productivity Climbs.

White House Shifts Attention to Small Biz
“The White House announced a flurry of small-business initiatives Monday, including a proposal to extend permanent capital-gains tax relief to investors who put money into small companies,” the Wall Street Journal reported last week.

Picking up where President Obama’s recent State of the Union address left off, the White House last week announced several proposals aimed at boosting small business and entrepreneurship, including permanently eliminating capital gains taxes on investments held by certain small businesses for more than five years, a separate Journal report explains. If approved by Congress, this provision, which was part of the small-business jobs bill passed in September, would extend the tax break for small businesses for more than five years.

The White House is also joining forces with the likes of Intel Capital, IBM and Hewlett-Packard as part of the Startup America Partnership. Funded in part by the Kauffman Foundation and the Case Foundation, the goal of the partnership is “to increase the number of new, high-growth firms that are creating economic growth, innovation and quality jobs,” according to the organization’s website. Intel, IBM and HP are all investing millions of dollars in entrepreneurship, while Facebook and Google are both launching entrepreneurship education and support programs.

Other ideas floated by the White House under Startup America include: a $2 billion commitment by the Small Business Administration (SBA) to private-sector investment over the next five years; new or expanded mentorship and education programs from the Department of Energy, the Department of Veterans Affairs and several private and nonprofit groups; and a series of roundtable discussions hosted by the SBA to identify any government policies that might be stifling firms from growing.

“This partnership will bring together partners from across the private, public and non-profit sectors, working together toward a common goal: supporting the entrepreneurs who are the lifeblood of our economy,” Kauffman Foundation CEO Carl Schramm said in a press release of the news.

Factory Orders Increase in December
New orders for U.S. manufactured goods rose 0.2 percent ($0.7 billion) in December thanks to a boost in demand for machinery and communications equipment, according to the U.S. Department of Commerce last week. New orders, up five of the last six months, climbed to $426.8 billion for the month. Excluding the often-volatile transportation industry, new orders increased 1.7 percent.

“Manufacturing has been one of the standout performers in the current recovery and economists predict further gains this year,” the Associated Press reports. “Economists expect businesses will take advantage of tax breaks passed by Congress in December to boost their spending on new equipment, and that will fuel manufacturing growth. Those tax breaks expire after 2011.”

New orders for manufactured durable goods, down three consecutive months, fell 2.3 percent in December following a 0.1 percent decrease in November. Transportation equipment saw the largest decline, falling 12.7 percent to $39.2 billion. However, much of these losses were offset by orders for manufactured non-durable goods, which rose 2.3 percent to $235.2 billion.

Goods shipments, up four consecutive months, increased 2 percent to $436 billion in December, following a 1.6 percent rise in November. Inventories, up 11 of the past 12 months, climbed 1.1 percent to $550.4 billion, while unfilled orders declined for the first time in eight months, falling 0.4 percent to $822.8 billion.

European manufacturing has also been posting strong growth. The Markit Eurozone Manufacturing PMI, a key indicator of international factory activity, reached a nine-month high of 57.3 in January, with growth led by Germany and Austria. For the past 16 months, the Eurozone PMI has remained above the 50-point mark that indicates overall growth for the sector.

Unemployment Rate Falls in January
The national unemployment rate in the U.S. fell to 9 percent in January, down from 9.4 percent in December and marking the lowest jobless rate in 21 months, despite only 36,000 jobs being added to the private sector last month, according to the U.S. Department of Labor on Friday.

The disparity between job creation and unemployment has caused some confusion and uncertainty about employment conditions in the country.

“The divergence between job creation and the unemployment rate can be traced to how the two benchmarks are calculated,” the Wall Street Journal explains. “The unemployment rate is based on a survey of households, rather than employers. In it, people who missed work because of weather are counted as employed regardless of whether they were paid for the time off.”

Difficult weather conditions likely contributed to the depressed rate of job creation, as the number of jobs added in January fell far below expectations. Economist polled by MarketWatch had forecast payrolls would rise by 140,000 and that the unemployment rate would go up, rather than down, for the month.

Experts also attribute the findings to extensive revisions made to the census population data last month and an increase in people exiting the labor force entirely. However, manufacturing was a major bright spot in January, adding 49,000 new jobs in the biggest monthly increase for the sector since 1998.

“Economists noted that job growth would not truly hit the levels needed to seriously dent the unemployment rate until employers outside of a handful of industries started hiring in earnest,” the New York Times reports. “A crucial factor holding back job growth is that construction, which was among the hardest hit during the recession, has not yet revived.”

Worker Productivity on the Rise
The productivity of U.S. workers climbed in the fourth quarter of 2010 as businesses sought to contain labor costs, the U.S. Department of Labor reported last week. Employee output per hour rose at a 2.6 percent annual rate, up from a revised 2.4 percent gain in the previous three months.

Among manufacturers, productivity rose at a 5.8 percent annual pace, the fastest in a year, after rising 1.4 percent in the third quarter of 2010.

“For the most part, businesses have done more with less,” MarketWatch explains. “In the fourth quarter, for example, the U.S. economy produced slightly more goods and services than it did three years ago, but with 7 million fewer workers.”

In the fourth quarter, the quantity of goods and services produced, known as real output, grew at an annualized 4.5 percent rate. Hours worked rose 1.8 percent and compensation per hour increased 1.9 percent. Labor costs, adjusted for efficiency gains, dropped 0.6 percent in the fourth quarter, following a 0.1 percent drop in Q3.

For all of 2010, U.S. productivity grew 3.6 percent, marking the fastest increase in eight years.