Small Business Hiring Increases in November, Reversing Earlier Declines

The CBIZ Small Business Employment Index reported an increase in hiring in November, signaling a reversal in the downward trend seen in the previous three months

The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted increase of 0.59% in November. The reading showed an increase in hiring, a reversal in the downward trend that was observed in the three previous months. The CBIZ SBEI tracks payroll and hiring trends for over 3,500 companies that have 300 or fewer employees, providing broad insight into small business trends.

“Strength in consumer spending bolstered small businesses hiring in November,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Retirement & Investment Solutions. “Small businesses responded to consumer support of restaurants and businesses that provide recreational services. This data is reinforced by strong near-term spending trends seen in the personal expenditure measurement by the Bureau of Economic Analysis.”

The Bureau of Labor Statistics’ employment report indicated hiring growth that beat expectations. The November reading showed an overall increase of 263,000 private-sector jobs. Despite the overall hiring growth, the national unemployment rate stayed flat at 3.7%. The report is inclusive of all non-farm private employers across businesses of all sizes. Meanwhile, the ADP employment report showed an overall increase of 127,000 private-sector jobs for the month. Despite the overall hiring growth, small businesses accounted for a decrease of 51,000 of those jobs on a seasonally adjusted, month-over-month basis. The ADP report counts small businesses as companies with 49 or fewer employees, while the CBIZ SBEI uses data from companies with 300 employees or fewer.

On a regional level, the West (2.64%) saw a significant increase in hiring compared to the rest of the United States. Additionally, the Southeast (0.67%), and Central (0.59%) also reported a modest increase in hiring. The Northeast (-0.59%) was the only region to experience a decline in hiring in November.

From an industry perspective, the most notable hiring increases were seen in Arts, Entertainment and Recreation, Accommodations and Food Services, Information, and Non-Profit. Construction, Rental and Leasing Services, Technology and Life Sciences, and Utilities all experienced declines in hiring.

Rathbun added: “The weakness observed in tech hiring reveals skimming of the froth in this sector and signals belt-tightening may be on the horizon in the more speculative areas of the economy.”

To view an infographic with data from the employment index, visit the CBIZ website.

Additional takeaways from the November SBEI include:

November’s snapshot: 21% of companies in the index increased staffing, 59% made no change to their headcounts and 20% reduced employment totals.

Industries at a glance: Arts, Entertainment and Recreation, Accommodations and Food Services, Information, and Non-Profit saw hiring gains. Decreases were seen in Construction, Rental and Leasing Services, Technology and Life Sciences, and Utilities.

Geographical hiring: The West (2.64%), Southeast (0.67%), and Central (0.59%) regions all experienced an increase in hiring, while the Northeast (-0.59%) region saw a hiring decline.

What’s next? Weakness in the general labor market is likely to be observed heading into 2023. Small businesses will need to stay resilient as they continue to face challenges impacting their companies.

Editor’s note:

(1) The SBEI illustration is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License. Based on our work at https://www.cbiz.com.

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About CBIZ

CBIZ, Inc. is a leading provider of financial, insurance and advisory services to businesses throughout the United States. Financial services include accounting, tax, government health care consulting, transaction advisory, risk advisory, and valuation services. Insurance services include employee benefits consulting, retirement plan consulting, property and casualty insurance, payroll, and human capital consulting. With more than 100 Company offices in 32 states, CBIZ is one of the largest accounting and insurance brokerage providers in the U.S. For more information, visit www.cbiz.com.

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