Sunny Skies Remain For SMBs As Summer Heads Into Autumn

With August wrapping up and summer coming to a close in the U.S., analysts are diving into small business sentiment and performance yet again. ADP, Paychex and Reliant Funding have all released reports this week on the state of SMBs, and overall, the sentiment is a fairly positive one. Job growth is steady, wages are up and optimism is holding fast thanks to hope that state- and local-level governments will push forward with an SMB-friendly agenda. Here are the biggest data points from the latest research.

Employment

ADP’s latest employment report, released in conjunction with Moody’s, found the private sector added 237,000 jobs in August, the third month in a row of significant hiring increases, reports said Wednesday (Aug. 30). But reports in USA Today also noted that ADP’s data may overshoot that of the Labor Department’s, with High Frequency chief U.S. economist Jim O’Sullivan estimating 160,000 new jobs added in the Labor Department’s report, expected out this Friday.

According to ADP analysis, small businesses, defined as companies with between one and 49 employees, added 48,000 jobs, and mid-sized firms, with between 50 and 499 employees – added 74,000 jobs, both promising stats, according to Moody’s analytics chief economist Mark Zandi.

“Job creation is strong across nearly all industries, company sizes,” Zandi said in a statement, adding that there is a downside to this job growth. “Mounting labor shortages are set to get much worse.”

The latest Paychex | IHS Market Small Business Employment Watch, meanwhile, showed a slowdown in small business job growth – the sixth month in a row that such a trend has been observed.

Also defining small businesses as those with fewer than 50 employees, Paychex found a minimal monthly decline in the employment index, with analysts concluding that, overall, hiring growth is pretty stagnant. The good news, though, is that wages climbed and hit a three percent annual growth rate in August.

“In reaching 3.00 percent, wage growth hit an important milestone this month,” said Paychex President and CEO Martin Mucci in a statement. “The combination of steadily rising wages and relatively consistent job growth are indicators of a healthy small business sector, especially in a year when small business owners are uncertain about potential policy changes and their business implications.”

Optimism

Speaking of policy changes, Paychex also released another report this week to identify the top regulatory initiatives affecting employers across the nation as more state- and local-level authorities make progress with their own lawmaking initiatives.

Those regulations include equal pay laws and salary history restrictions, paid leave laws, healthcare reform, state retirement plans and payroll card rules.

“The Trump administration is actively moving forward with its plans to create a more business-friendly environment,” stated Mucci in a separate statement. “Part of that agenda is the reduction of current regulations impacting employers. With the intent of advancing worker protections, state and local governments are responding, ushering in a new wave of employer-facing regulations.”

While small- and medium-sized business owners will have to keep a close eye on their particular governments’ regulatory initiatives, sentiment remains positive among the nation’s SMB community

Researchers at Reliant Funding surveyed more than 1,000 small business owners, companies with between five and 200 employees, and found that the majority agree their local governments promote small business growth, suggesting the local government initiatives outlined by Paychex could ultimately make a positive impact on the small business community.

Overall, Reliant Funding’s report found 63 percent say they are optimistic about the future, and more than three-quarters reported that their business is steadily growing.

“It’s encouraging to see such a positive outlook from America’s small business owners,” said Reliant Funding CEO Adam Stettner in a statement. “Tracking these variables offers great insight into how SMBs are feeling about their business and which direction they plan to take for growth. It’s also incredibly reflective of the current economic landscape.”

Researchers pointed to an ongoing challenge for some SMBs to access financing, with 28 percent saying it has been a struggle to access working capital and 30 percent saying they have been denied a loan from their bank.