Small Business Hiring Slows, Revenues Slide: Intuit
The latest numbers concerning the health of small businesses in the United States suggest the economic environment remains challenging, as small businesses are seeing weak employment and compensation growth, while hours worked and revenue rates decreased, according to the results for the monthly Intuit Small Business Employment and Revenue Indexes, which provide a picture of the economic health of the nation's small businesses. The data reflects employment from approximately 82,000 small business employers, a subset of small businesses that use Intuit Online Payroll.
Based on July's numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised downward the previously reported June growth rate to 0.2 percent. This equates to 40,000 jobs added in June, down from a previously reported 75,000 jobs, though Intuit noted these numbers are expected to change once the index is recalibrated. Employment increased by 0.17 percent in July, for an annualized growth rate of 2.1 percent, equating to approximately 35,000 new jobs created.
Based on data from Intuit Online Payroll and covering the period from January 2007 through July 23, 2012, average monthly compensation grew by 0.3 percent, or $7, while average monthly hours worked decreased by 0.3 percent, or 24 minutes. However, the average monthly pay for all small business employees increased to $2,724 in July, or the equivalent annual wage of about $32,700 per year, which the report noted is part-time work for many small business employees.
The Small Business Revenue Index, based on data from QuickBooks Online and covering the period from January 2005 through June 2012, indicated that small business revenue decreased by 0.5 percent from the previous month, with the accommodation and food services sector posting the biggest decline at 0.7 percent, followed by the retail industry at 0.5 percent. Small businesses overall saw declines in revenue in June. The construction industry and health care and social assistance sectors saw the smallest declines, at 0.01 and 0.04 percent, respectively.
"This month's indexes indicate a mixed bag for small businesses," Susan Woodward, the economist who worked with Intuit to create the indexes, said in prepared remarks. "Revenues have been declining for two months now, so the weak employment growth rate for July is not a surprise. The silver lining is the construction industry, which saw an increase in revenue in May and the smallest decline in June. While construction accounts for about 8 percent of employment among all companies, it accounts for roughly 20 percent of employment for small companies, so any change in this sector is important."