January is typically a rough month for jobs figures, with companies coming off the holiday highs and looking to strap down their finances and return operations to a smaller scale. The latest data found that overall, U.S. businesses actually added more jobs than expected to kick off the year. But small business hiring felt like an uphill climb.
Analysts at CBIZ noted that SMBs will have to wait to feel any meaningful impact from tax reform, and with the economy growing, the nation is close to full employment. That means slim pickings for employers, and often no need to hire in the first place.
But a more holistic look at analysis of small business hiring finds cause for optimism, especially as SMBs prepare to benefit from tax reform. Dive into the latest SMB jobs data below.
234,000 jobs were added in January by U.S. companies of all sizes, according to ADP and Moody’s Analytics data released last week. It surpasses earlier expectations of 190,000 jobs added for the month, but as research around small business hiring trends shows, it appears SMBs struggled to benefit from that hiring boost.
19 percent of SMBs increased head counts in January compared to December hiring figures, calculated CBIZ for its most recent Small Business Employment Index, published Friday (Feb. 2). The report, which analyzes hiring practices at companies with 300 employees or fewer, found 46 percent of SMBs did not change their head counts, while 35 actually reduced their staff numbers in January.
A 3.14 percent decline in hiring among SMBs may look like a “sizable” decrease, said Philip Noftsinger, president of the CBIZ employee services organization. But analysts noted that this is fairly expected for the month of January when, as Noftsinger described, “employers slim down head counts following the holidays.”
A 99.88 reading on the Paychex | IHS Markit Small Business Employment Index (which is on a scale of 100) means hiring at small businesses with fewer than 50 employees actually rebounded for January compared to December, marking a 0.18 percent increase month-over-month. Paychex did note, however, that the reading is still lower than it was for January 2017. Paychex’s vice president of risk, compliance and data analytics, Frank Fiorille, noted that for small businesses, the January index uptick is a combination of how the Index is calculated, and new, fast-growing Paychex customers. Fiorille, too, pointed to higher confidence among small firms thanks to tax reform.
58,000 jobs were added by small firms with fewer than 50 employees, according to ADP, a figure that puts Paychex’s Index reading in deeper context. According to ADP data, covered in reports by the Associated Press, the job additions were down from 93,000 that small businesses added in December, and lower than the average monthly job gains of 62,000 for 2017. But ADP noted that a decline in job growth among small firms isn’t necessarily anything to be worried about, especially with companies as a whole showing strong hiring activity for the month.
One-third of SMBs plan to hire in the next 12 months, found Wells Fargo and Gallup in a recent survey. Further, half of small business owners praised the government for its work on tax reform targeted at SMBs, though slightly less than half gave the government a negative rating for that very same thing, as well as for SMB-related regulations. Fifty-three percent gave the Trump administration a “good” rating on job creation.