September Hiring Data Reveals Steep Declines for Small Businesses

October 08, 2024 at 08:30 AM EDT

The CBIZ Small Business Employment Index reports a weakness in hiring across the country with each region losing jobs

The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted decrease of 2.60% in September as the third quarter comes to a close. The CBIZ SBEI tracks payroll and hiring data for over 2,800 companies that have 300 or fewer employees, providing broad insight into small business trends.

The Bureau of Labor Statistics’ employment report indicated hiring growth that soared past expectations. The September reading showed an overall increase of 254,000 private-sector jobs. The national unemployment rate fell slightly to 4.1%. The report is inclusive of all non-farm private employers across businesses of all sizes. The ADP employment report indicated hiring growth among medium and large-sized companies. Its September reading showed an overall increase of 143,000 private-sector jobs for the month. Despite overall growth, small businesses experienced a decrease of 8,000 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.

“There is a combination of economic data that is likely to influence hiring decisions,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “The positive jobs numbers seen in the Bureau of Labor Statistics report is contrasted by consumer confidence, JOLTS and additional headwinds that are painting a different picture for small businesses and the wider economy.”

All industries in the U.S. experienced job losses in September. The Northeast (-2.87%) saw the steepest decline, followed by the Central (-2.77%), Southeast (-2.50%), and West (-1.14%) regions.

On an industry level, Insurance, Not-for-Profit, and Transportation saw an uptick in hiring. Arts, Entertainment and Recreation; Manufacturing; and Technology and Life Sciences reported the largest job losses.

Rathbun added, “If you take a look under the hood, the JOLTS survey showed an increase in job openings, but beneath that headline, there was notable weakness as the quit rate fell to its lowest level since August 2020. Confidence in the strength of the labor market is waning among Americans, and this aligns with the recent Conference Board consumer survey, which also highlighted a lack of confidence in the labor market. It’s important to consider the various data sources in totality to understand the trends in the American jobs market.”

To view an infographic with data from the employment index, visit the CBIZ website.

Additional takeaways from the September SBEI include:

September’s snapshot: 15% of companies in the index increased staffing, 58% made no change to their headcounts and 27% reduced employment totals.

Industries at-a-glance: In September, 79% of industries experienced job losses, led by Arts, Entertainment and Recreation; Manufacturing; and Technology and Life Sciences. Increases were observed in Insurance, Not-for-Profit, and Transportation.

Geographical hiring: Regionally, the Northeast (-2.87%) and Central (-2.77%) regions saw the largest decrease in hiring, followed by the Southeast (-2.50%) and Western (-1.14%) regions.

What’s next? Small businesses still have a reason for optimism following the Fed’s interest rate reduction. There are no immediate implications of these data models on the market and broader economy, but small business owners could feel a trickle down effect from the recovery of Hurricane Helene in the Southeast as costs for building materials, insurance and other items could rise.

Editor’s note:

(1) The SBEI illustration is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License. Based on our work at https://www.cbiz.com.

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About CBIZ

CBIZ is a leading provider of financial, insurance and advisory services to businesses throughout the United States. Financial services include accounting, tax, government health care consulting, transaction advisory, risk advisory, and valuation services. Insurance services include employee benefits consulting, retirement plan consulting, property and casualty insurance, payroll, and human capital consulting. With more than 120 offices in 32 states, CBIZ is one of the largest accounting and insurance brokerage providers in the U.S. For more information, visit https://www.cbiz.com.