Small businesses created 55,000 new jobs in December and employees worked more hours and made more money, according to the results of this month's update of the Intuit's Small Business Employment Index, covering the period between Nov. 24 and Dec. 23. The monthly report found that small business employment grew by 0.3 percent in December, equating to an annual growth rate of 3.3 percent. Hours worked and compensation both grew by 0.4 percent.
The index is based on figures from small businesses with fewer than 20 employees that use Intuit Online Payroll. The company's figures also show that small business employment has continued to grow since the first quarter of 2011. Compensation per employee is up 3.4 percent for the year, which gives employees just a small gain after adjusting for inflation of about 3.3 percent. Hours worked are up 2.5 percent for the year, and the fraction of hourly people working full time is now at 31 percent, up from 29.7 percent a year ago.
"All of the figures we track show a stronger small business environment in December," said Susan Woodward, the economist who worked with Intuit to create the Index. "Employment, hours worked by non-salaried people, and compensation all rose. But there is an interesting phenomenon occurring: We're seeing larger month-to-month changes in seasonally adjusted employment, hours worked and compensation over the last four months, compared to earlier in 2011. This indicates greater volatility in the small business indicators, and parallels, with a slight lag, the recent increased volatility in the stock market. All suggest that while a mild recovery is underway, it is fragile because uncertainty is higher."
Based on December's numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised upward the previously reported growth rate for November to 0.4 percent from 0.3 percent. This equates to 70,000 jobs added in November, up from a previously reported 55,000 jobs. Small business hourly employees worked an average of 110.3 hours in December, making for a 25.4-hour workweek. This is a 0.4 percent increase from the revised November figure of 109.9 hours.
"December is a special month. The number of hours worked are usually the highest, and employers typically pay bonuses," said Woodward. "This is why it is important to adjust for seasonality. Even on a seasonally adjusted basis, hours worked by non-salaried employees and compensation are up, and compensation is even up after adjusting for inflation. However, like recent changes in employment, changes in hours worked and compensation have been unusually volatile so we don't know if these improvements will be permanent."