A couple of recent reports indicate that small businesses could finally be seeing a light at the end of the proverbial tunnel.
Small business employers added 67,000 jobs in May according to ADP, a company that provides payroll services. This compares to a gain of 57,000 jobs in April but is lower than the average monthly numbers seen from January through March. ADP’s numbers reflect hiring trends among small business employers with fewer than 50 workers.
While some observers read into these numbers the residual doubts in business owners’ minds concerning the state of the economy, others detect a certain optimism, seeing the numbers as a sign that company owners may be hiring only cautiously, and yet they are still hiring.
Intuit study says recovery will take at least 2 years
According to a report by Intuit Inc, creators of online payroll software for smaller companies, small businesses will need a couple more years of similar employment growth to reach prerecession hiring levels. Intuit uses monthly small business employment and revenue indexes to help create a picture of the economic health of America’s small businesses.
The Intuit Small Business Revenue Index is based on data from approximately 170,000 small businesses.
Susan Woodward, an economist who works with Intuit in creating their indexes, says, “The employment and revenue indexes tell a consistent story. Both indicate there is a recovery underway. We need growth at this level for two more years for small business employment to return to the level we saw in early 2007.”
Some small business sectors are doing well while others, like construction, are faring poorly. “We know from other federal data as well that construction is still very depressed,” says Woodward. “Single family construction is running about 600,000 units per year, compared to 1.5 million units per year in normal times.”
However, Smallbiztrends.com reports that “small businesses could again be a key factor in hiring and employment over the next few months, with most hiring happening at smaller companies while corporate giants cut back.”
But to make a significant difference in the economy, small businesses will need to start hiring at an accelerated pace. Unemployment increased to 8.2 percent last month.