Sept. 2, 2005--Few jobs were gained and lost in the general economy in August, but many small businesses were definitely hiring.
The Labor Department reported that unemployment fell .1% in August, continuing a 27-month downward trend. At the same time, 169,000 new jobs overall were added to the economy.
"Small business is certainly doing its part," said Bill Dunkelberg, an economist with the NFIB. Eighteen percent of firms surveyed by the National Federation of Independent Business in August said they added employees.
Michael Alter, whose firm SurePayroll surveys small business managers, said that the employment data is consistent with the optimism he's seeing in his hiring index released Friday.
Despite numerous economic factors that make it tough to do business - rising energy prices, a widening trade deficit, and increasing interest rates - small businesses continue to find ways to grow their businesses and add new staff," said Alter in a statement. SurePayroll's hiring index rose .6% year-to-date, on track to meet his 2005 estimate of .9%.
According to the Labor Department, employment in retail trade hit a plateau after a large gain in July, though wholesalers added 150,000 jobs. The Kansas City Federal Reserve Bank found that the manufacturing production is growing in Midwestern states. In particular, mining added 67,000 jobs in August driven largely by the demand for oil and gas operations, the report concluded.
Just what impact Katrina will have on third quarter jobs data and other economic trends is up for debate. Bill Dunkelberg, an economist with the National Federation of Independent Business, said the economy continues to show strength and hurricane Katrina should not have much an impact on third quarter growth.
"Louisiana and Mississippi contribute less than 2% to gross domestic product," said Dunkelberg. "Were it not for the human tragedy, this would be a relatively minor economic event."
Alter, however, said Katrina will put such a squeeze on raw materials and loans for rebuilding that it will hamper general economic growth. As a result, the Federal Reserve will not be able to raise interest rates, he said.