The CBIZ Small Business Employment Index experienced a minor increase in hiring following July’s steep losses

The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted increase of 0.47% in August. After a steep decline in hiring in July, August saw a mild recovery in small business hiring. 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.

“While August's SBEI report noted a slight increase in small business hiring, it's evident we haven't fully rebounded from the prior month's losses,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “This overarching softness in the labor market aligns with recent findings from the JOLTS survey, as well as the latest ADP and BLS reports.”

The Bureau of Labor Statistics’ employment report indicated hiring growth that beat expectations. The August reading showed an overall increase of 187,000 private-sector jobs, but the previous two months saw a downward revision of 110,000 jobs. Even with the overall hiring growth, the national unemployment rate increased to 3.8%. The report is inclusive of all non-farm private employers across businesses of all sizes. Similarly, the ADP employment report indicated hiring growth among small, medium-sized and large companies. Its August reading showed an overall increase of 177,000 private-sector jobs for the month. Small businesses accounted for an increase of 18,000 of those jobs on a seasonally adjusted, month-over-month basis, which was the weakest gain in small business hiring since the beginning of the year. 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.

On a regional level, the CBIZ SBEI data reported the largest increase in hiring in the Northeast (0.75%) followed by the Central (0.17%), and Southeast (0.15%) regions. The West (-0.72%) was the only region to experience a decline.

From an industry perspective, gains in employment were seen in Education Services, Information and Technology, and Management. Industry decreases were observed in Rental and Leasing Services, Transportation, and Wholesale Distribution.

Rathbun added, “As the cushion from pandemic stimulus savings dwindles and with student loan payments set to resume this fall, many Americans in search of additional employment might face a less robust job market.”

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

Additional takeaways from the August SBEI include:

August’s snapshot: 22% of companies in the index increased staffing, 59% made no change to their headcounts and 19% reduced employment totals.

Industries at-a-glance: Education Services, Information and Technology, and Management experienced hiring gains. Decreases were seen in Rental and Leasing Services, Transportation, and Wholesale Distribution.

Geographical hiring: The Northeast (0.75%), Central (0.17%), and Southeast (0.15%) regions reported increases in hiring, while the West (-0.72%) was the only region to decline in August.

What’s next? With signs pointing to a weakness in the labor market, small business owners will have to navigate tightening conditions in the latter half of 2023.

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.

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