Small Business Unemployment Losses Stabilizing, Report Finds

Automatic Data Processing's (ADP) monthly employement report found small businesses shed 68,000 jobs in November, but the sector may be stabilizing.

Job losses among small to medium-size businesses (SMBs) are slowing, according to the latest report from Automatic Data Processing (ADP), a measure of employment derived from an anonymous subset of roughly 500,000 U.S. business clients. Small businesses shed a total of 68,000 employees in the month of November, according to the report. ADP defines small businesses as those with fewer than 50 employees on the payroll.

The ADP National Employment Report, createdin partnership with Macroeconomic Advisers, LLC, is derived from actual payroll data and measures the change in total nonfarm private employment each month. Joel Prakken, chairman of Macroeconomic Advisers, said nonfarm private employment decreased 169,000 from October to November 2009 on a seasonally adjusted basis, according to the ADP National Employment Report. "November was the eighth consecutive month during which the decline in employment was less than in the previous month," he noted. "Although overall economic activity is stabilizing, employment usually trails economic activity, so it is likely to decline for at least a few more months."

In November, construction employment dropped 44,000. This was its thirty-fourth consecutive monthly decline, and brings the total decline in construction jobs since the peak in January 2007 to 1,721,000. Employment in the financial services sector dropped 17,000, the twenty-fourth consecutive monthly decline. "Employment among small-size businesses, defined as those with fewer than 50 workers, declined 68,000 in November," Prakken said. "November's employment decline was the smallest since July of 2008. Overall economic activity is stabilizing and employment losses among small-size businesses are diminishing."

The report comes on the heels of a survey by The Discover Small Business Watch, compiled each month by research firm Rasmussen Reports, which shows midmarket companies are expressing reduced economic confidence levels as the holiday season approaches. The survey, which received responses from approximately 750 small business owners, suggests the mood of small business owners generally has soured in November for three straight years, as economic confidence dropped from October to November in 2007 and 2008. The November 2008 index of 67.5 is the low point for the Watch since it started in August 2006. The survey found 52 percent of owners said they have experienced cash flow issues in the past 90 days, up from 44 percent in October, and 41 percent of owners said they have not experienced cash flow issues, which is the lowest response in this category since the Watch began.