The CBIZ Small Business Employment Index experienced a slight decrease in hiring as the labor market experiences softness heading into year-end
The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted decrease of 0.40% in September, as the labor market experiences some softness heading into the fall. The CBIZ SBEI tracks payroll and hiring trends for over 3,200 companies that have 300 or fewer employees, providing broad insight into small business trends.
“As we head into the fall months, there’s a softness evident in the labor market,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “This is an important juncture for the labor market as the pandemic stimulus savings are set to run out and student loan payments begin.”
The Bureau of Labor Statistics’ employment report indicated hiring growth that beat expectations. The September reading showed an overall increase of 336,000 private-sector jobs. Even with the overall hiring growth, the national unemployment rate remained flat at 3.8%. The report is inclusive of all non-farm private employers across businesses of all sizes. Meanwhile, the ADP employment report indicated hiring growth among small and medium-sized companies. Its September reading showed an overall increase of 89,000 private-sector jobs for the month. Small businesses accounted for an increase of 95,000 of those 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.
“We are in a situation where the JOLTS, ADP, and BLS non-farm payroll numbers do not validate one another,” Rathbun added. “The lack of clear direction in the labor market reports as a whole suggests an economy that is also in want of clear directionality. Considering the headwind for consumers’ wallets starting in the fall months, as well as companies facing higher rates as they refinance, the disagreement among various data sources may suggest an economy at an inflection point, changing from soft to a hard landing.”
The CBIZ SBEI regional data showed a hiring decrease in three out of the four regions in September. The West (0.84%) experienced an increase, while the Northeast (-0.75%), Central (-0.49%), and Southeast (-0.42%) all experienced declines in hiring.
From an industry perspective, gains in employment were seen in Education Services, Information, Mining, and Transportation. Industry decreases were observed in Administration and Support Services, Arts, Entertainment and Recreation, Technology and Life Sciences, and Utilities.
Rathbun added, “As people face tightening financial pressures and cash flow challenges, we might see an increased return to the workforce. But, reduced discretionary spending can also be a headwind for small businesses, and impact hiring overall.”