May Experiences Robust Hiring Increase Among Small Businesses

June 11, 2024 at 08:30 AM EDT

The CBIZ Small Business Employment Index reported hiring gains in every region in the U.S.

The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted increase of 2.69% despite indications of softening economic growth. The CBIZ SBEI tracks payroll and hiring trends for over 3,000 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 beat expectations. The May reading showed an overall increase of 272,000 private-sector jobs. The national unemployment rate rose slightly to 4%. The report is inclusive of all non-farm private employers across businesses of all sizes. Meanwhile, the ADP employment report indicated hiring growth among medium and large-sized companies. Its May reading showed an overall increase of 152,000 private-sector jobs for the month. Despite overall growth, small businesses experienced a decrease of 10,000 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.

"In general, the May jobs data from the Bureau of Labor Statistics contain many underlying contradictions, which take confidence away from the headline number and its implications about the economy as a whole,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “The underlying dispersion in the data paints a picture of an economy utilizing more part-time help. Small businesses may be tapping into the part-time labor market to ensure that their demands are met, despite the complexities of the current labor market."

Every region in the U.S. experienced employment gains. The Northeast (4.50%) saw the largest increase, followed by the Central (2.72%), Southeast (1.52%), and West (0.90%) regions.

On an industry level, Accommodation and Food Services; Administrative and Support Services; and Information saw the largest increases in hiring. Financial Services and Government were lagging behind, but Wholesale Distribution was the only industry to experience job losses.

Rathbun added, “Despite the strong headline nonfarm payroll number, the underlying data suggests more confusion about the state of the labor market than confirming the strength behind the 272,000 jobs gained. The Establishment Survey showed a gain of 272,000 jobs, but the Household Survey reports a loss of 408,000 jobs - a 700,000 difference. This discrepancy, especially with -625,000 losses in full-time jobs and +286,000 gains in part-time jobs, has been the pattern for about a year now, which isn’t great. The gains in the SBEI may be capturing a lot of that part-time payroll.”

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

Additional takeaways from the May SBEI include:

May’s snapshot: 25% of companies in the index increased staffing, 60% made no change to their headcounts and 15% reduced employment totals.

Industries at-a-glance: Accommodation and Food Services; Administrative and Support Services; and Information experienced hiring gains. Wholesale Distribution was the only industry that saw a decrease.

Geographical hiring: The Northeast (4.50%), Central (2.72%), Southeast (1.52%), and West (0.90%) regions all experienced hiring growth.

What’s next? Despite indications of softening economic growth, small businesses continue to charge ahead in navigating a higher interest rate environment and slack in domestic demand. Tight labor market conditions keep full staffing a priority for many businesses.

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.