Was July a good month for small businesses? It depends on whom you ask -- or who does the asking.
According to the payroll "solutions" firm ADP, net non-farm civilian employment increased in July by 48,000 people from June, thanks to smaller businesses. "Small- and medium-size businesses more than accounted for the increase in total employment in July, with employment among these businesses advancing by 61,000," according to the ADP National Employment Report. Firms with fewer than 50 people accounted for nearly 75 percent of those jobs. "In contrast," ADP continued, "employment among large businesses fell by 13,000 in July, the second consecutive monthly decline."
Predictably, all of the growth, regardless of firm size, came from service industries. (ADP draws its data from 383,000 US clients who employ 23 million people, or nearly 15 percent of the total workforce, as calculated by ADP. ADP undercounts service sector employment by about 20 percent compared to the US government's Bureau of Labor Statistics monthly Employment Situation, but the BLS report doesn't chart employment changes by business size.) Manufacturing, meanwhile, continued to decline -- but here again, small businesses fared better than their larger competitors, registering a fall-off of just 7,000 jobs. Big manufacturers, on the other hand, were especially hard hit: they lost more than twice as many jobs (17,000) from a base only half as large. Ouch -- that giant sucking sound.
That's good for small business, right? Well, good maybe, but not great, says William Dunkelberg, chief economist of he National Federation of Independent Business. Previewing the NFIB's August Economic Report, Dunkelberg issued a statement announcing that "Small-business owners managed to do some solid, but not spectacular, hiring in July." Citing seasonally adjusted figures, Dunkelberg said 14 percent of small firms surveyed (drawn from NFIB's membership) increased employment by 3.7 employees per firm, while 13 percent reduced employment by 2.6 workers. Spread over all firms, the gain worked out to "0.1 employees per firm." Over the next three months, "17 percent plan to create new jobs (down three points), and 10 percent plan workforce reductions (up three points), yielding a seasonally adjusted net 13 percent of owners planning to create new jobs — up a point from June." If, that is, they can find the people. Of those trying to hire, said Dunkelberg, "80 percent reported 'few or no qualified applicants' for their positions."
But apparently all this is going exactly according to plan. According to the "Quarterly Business Confidence Survey" released yesterday by the contract human resources firm Adiministaff, 59 percent of respondents said "they are meeting their initial business projections this year," while another 23 percent are exceeding expectations. Administaff clients would appear to be generally better off than NFIB members (for one thing, they can afford the luxury of delegating their HR), since the survey also found that 50 percent of respondents "were hiring" additional full-time staff this year; 13 percent planned to add part-timers.