August 5, 2005--Hiring by small businesses improved in July but lagged behind the rest of the economy, according to two surveys released this week. While a government report showed that the economy added 207,000 jobs, a survey conducted by a payroll processing firm found that small businesses are hiring at a more modest clip.

The SurePayroll Small Business Scorecard, based on data from the company's 15,000 small business customers, reported that hiring increased by 0.1% in July, bringing the year to date growth to 0.4%. By contrast, the Labor Department's payroll survey showed a .2% increase in hiring for the month and a 1.1% increase on the year. While July was the fifth straight month in which small firms added jobs, "the magnitude of growth is less than desired," according to SurePayroll CEO Michael Alter.

"The small business economy appears to have a case of the summer doldrums," Alter said, adding that the slow hiring is as much the result of seasonal realities as it is the result of economic difficulties. "Many small businesses we've talked to are simply finding that it's tough to track down prospective customers in late summer months."

The Labor Department's assessment of the overall economy was stronger than expected, exceeding analyst expectations as well as gains in May and June, when the economy added 126,000 and 166,000 jobs, respectively. The household survey, favored by some small business groups because it includes self-employed individuals, was unchanged in July with the unemployment rate holding steady at 5%.

Small businesses salaries did manage to keep pace with overall salary growth in July. The government data showed that average hourly earnings grew by 6 cents or 0.4%, the biggest jump this year, while the SurePayroll pay index increased for the second straight month.