Small Businesses Wrap-Up 2023 with Minimal Hiring Gains
The CBIZ Small Business Employment Index ("SBEI") reported a seasonally adjusted increase of 0.69% in December. In a month that tends to experience strong hiring numbers due to increased holiday demand, the reading for December was a modest gain and the underlying patterns imply economic weakness. The CBIZ SBEI tracks payroll and hiring trends for over 3,100 companies that have 300 or fewer employees, providing broad insight into small business trends.
"The labor market has shown resilience from a headline perspective," said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. "The underlying layers show some weakness, and there is a tug of war for small businesses between trying to retain existing talent and managing a more challenging economic environment."
The Bureau of Labor Statistics' employment report indicated hiring growth that exceeded expectations. The December reading showed an overall increase of 216,000 private-sector jobs. The national unemployment rate remained at 3.7%. 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, medium and large-sized companies. Its December reading showed an overall increase of 164,000 private-sector jobs for the month. Small businesses accounted for an increase of 74,000 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.
Every region in the U.S. reported a hiring increase in December. The West (1.31%) experienced the largest increase followed by the Central (0.91%), Northeast (0.42%), and Southeast (0.12%) regions.
On an industry level, gains in employment were seen in Construction, Healthcare, and Nonprofit. Industry decreases were observed in Administration and Support Services, Rental and Leasing Services, and Utilities.
Rathbun added, "Many businesses prefer to hold on to their staff amid a labor shortage, so gains and losses in the last two years have been more marginal compared to historical data. 2024 may prove to be a pivotal year where businesses continue or break the current trend."
To view an infographic with data from the employment index, visit the CBIZ website.
Additional takeaways from the December SBEI include:
December's snapshot: 23% of companies in the index increased staffing, 60% made no change to their headcounts and 17% reduced employment totals.
Industries at-a-glance: Construction, Healthcare, and Nonprofit experienced hiring gains. Decreases were seen in Administration and Support Services, Rental and Leasing Services, and Utilities.
Geographical hiring: The West (1.31%) reported the largest hiring increase, followed by the Central (0.91%), Northeast (0.42%), and Southeast (0.12%) regions.
What's next? Despite growth, the modest hiring in December could point to some weaknesses as small businesses look ahead to the typically slower months after the holidays.
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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