The CBIZ Small Business Employment Index
reported weakness in what should be a robust season for the small
business labor market
The CBIZ Small Business Employment Index (“SBEI”) reported a
seasonally adjusted decrease of 1.00% in July, marking the second
straight month of job losses during a time of year that typically
sees robust employment gains. The CBIZ SBEI tracks payroll and
hiring data for over 2,900 companies that have 300 or fewer
employees, providing broad insight into small business trends.
The Bureau of Labor Statistics’ employment report indicated
hiring growth that missed expectations. The July reading showed an
overall increase of 114,000 private-sector jobs. The national
unemployment rate rose to 4.3%. The report is inclusive of all
non-farm private employers across businesses of all sizes.
Similarly, the ADP employment report indicated hiring growth among
medium and large-sized companies. Its July reading showed an
overall increase of 122,000 private-sector jobs for the month.
Despite overall growth, small businesses experienced a decrease of
7,000 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.
“For some time, we have observed a divergence in labor market
data. While recent BLS data has shown positive trends due to their
lagging models, recent reports have started to reflect a more
disappointing reality,” said Anna Rathbun, CFA, Chief Investment
Officer, CBIZ Investment Advisory Services, LLC. “This week, we saw
the JOLTS quit rate signal an insecure workforce, the ADP jobs
number miss expectations, and our SBEI data indicate a downside
trend, with the BLS numbers finally aligning with other labor
market sources. Although the labor market remains stable with a
historically low unemployment rate of 4.3%, the critical question
now is whether the rate of change will accelerate in the wrong
direction.”
Regionally, the West (-5.54%) saw the largest decrease in
hiring, followed by the Central (-1.44%) and Southeast (-0.11%)
regions. The Northeast (1.15%) was the only region to experience
hiring gains.
On an industry level, Management, Mining, and Utilities saw an
increase in hiring. Educational Services, Not-for-Profit, and
Transportation reported the largest job losses.
Rathbun added, “Some people are saying this is a 'correction'
following too much hiring after the pandemic rush for skilled
workers. While there is probably some truth to that, it also
reflects an anchoring bias within the economist community.”
To view an infographic with data from the employment index,
visit the CBIZ website.
Additional takeaways from the July SBEI include:
July’s snapshot: 20% of companies in the index increased
staffing, 60% made no change to their headcounts and 20% reduced
employment totals.
Industries at-a-glance: In July, 68% of all industries
saw job losses, led by Educational Services, Not-for-Profit, and
Transportation. Management, Mining, and Utilities experienced
hiring gains.
Geographical hiring: The Northeast (1.15%) was the only
region to report hiring increases. The West (-5.54%) experienced
the largest drop in employment, followed by the Central (-1.44%)
and Southeast (-0.11%) regions.
What’s next? Small businesses will need to carefully
track economic indicators to navigate potential shifts in the labor
market. Despite current stability, there's a growing focus on
understanding whether hiring trends will continue to slow,
requiring businesses to adapt accordingly.
The July CBIZ SBEI data follows the Summer 2024 release of the
CBIZ Main Street Index, which surveyed 549 businesses throughout
the U.S. as they navigate the current economic environment.* The
Index showed a notable sense of confidence for SMBs, but labor
challenges remain the top concern, with two-thirds (62.4%) saying
having an adequate number of skilled workers is their biggest
issue, up 16% from January 2024.
The data revealed a notable positive shift in economic
sentiment, with only 33% reporting concerns about interest rates
affecting their bottom line, compared to 61% in the third quarter
of 2023.
*Note: Not all of those surveyed in the CBIZ Main Street Index
are clients of CBIZ. 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.
Follow CBIZ on Twitter at @CBZ or on Facebook.
About CBIZ CBIZ 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
120 offices in 32 states, CBIZ is one of the largest accounting and
insurance brokerage providers in the U.S. For more information,
visit https://www.cbiz.com.
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Media Alex Ortiz Gregory FCA for CBIZ
Alexo@gregoryfca.com 610-228-2119