Small-Business Hiring Picks Up in August: CBIZ

The CBIZ small-business employment index posted modest gains for August after a decline in July.

While the overall economy remains stuck with slow growth and a struggling labor market is dominating headlines, the August small-business employment index (SBEI), published by business and payroll services firm CBIZ, showed a small uptick in small-business hiring to 1.15 percent, following a decrease of 1.57 percent in July. The index, a barometer for hiring trends among companies with 300 or fewer employees, found 29 percent of the companies surveyed increased staffing while 20 percent of the companies decreased employee headcounts.

Slightly more than half (51 percent) of the companies surveyed maintained their number of employees. The report predicted that more small-business owners might be hesitant to hire new employees in anticipation of a reduction in business demand as the United States heads toward a looming "fiscal cliff," a combination of tax hikes and spending cuts that could negatively impact the struggling economy. The report also said the end of the summer travel season, in combination with the return on students to college campuses, would have a negative impact on the SBEI in September, although the holiday shopping season could drive the index higher.

"Mirroring other employment reports released last Friday, the CBIZ small-business employment index also shows a gain for the month of August. These data sets, taken together, provide some hope that employment is at least on solid ground and increasing moderately," Philip Noftsinger, business unit president for CBIZ Payroll Services, said in a press statement. "In order to have a material impact on the broad number of unemployed Americans, job growth will need to continue to grow at a pace much faster than we have experienced over the past few months."

The CBIZ index follows a report by business outsourcing solutions specialist Automatic Data Processing (ADP), which found employment on small payrolls-those with up to 49 workers-rose 99,000 in August. Employment levels among medium-sized payrolls, classified as those with 50 to 499 workers, rose by 86,000, while employment on large payrolls, or those with 500 or more workers, increased by 16,000 jobs in August. Employment in the private services sector, private goods sector and financial services sector all posted gains. Overall, employment in the nonfarm private business sector rose 201,000 from July to August.

"The August increase of 201,000, following a solid gain in July, supports the notion that the underlying trend in hiring has picked back up after slowing sharply during the spring," Joel Prakken, chairman of Macroeconomic Advisers, said in a press statement. The gain in private employment in August is strong enough to suggest that the national unemployment rate may have declined."