Hiring Growth for Small Businesses Continues in March
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The recent uptick in the CBIZ Small Business Employment Index (SBEI) offers a nuanced view of the labor market, particularly within the small business sector. An increase of 0.18% in March suggests modest growth, which aligns with broader economic indicators of resilience. Small businesses, often seen as a bellwether for economic trends, seem to be cautiously expanding their workforce.
It is important to note that the SBEI's coverage of businesses with up to 300 employees provides a more comprehensive snapshot of the small business sector than the ADP report, which focuses on companies with up to 49 employees. The difference in scope can lead to variations in data interpretation, making the SBEI a valuable complement to existing labor market reports.
From a regional perspective, the hiring increases in the Northeast, Central and Southeast regions indicate a geographic dispersion of economic health. Conversely, the slight decrease in the West suggests regional disparities in business conditions. Such regional analysis can be vital for investors and policymakers who are aiming to understand the uneven recovery across the country.
The sector-specific performance mentioned in the SBEI report highlights divergent trends within the small business landscape. Notable hiring gains in Administrative and Support Services, Agriculture, Fishing and Hunting and Arts, Entertainment and Recreation sectors could indicate sector-specific demand factors or seasonal adjustments. On the other hand, the declines in Insurance, Technology and Life Sciences and Wholesale Distribution may point to industry-specific headwinds or disruptions.
Understanding these sector trends is important for investors and businesses as they can signal shifting consumer preferences or emerging market opportunities. For example, the growth in Arts, Entertainment and Recreation might reflect a post-pandemic recovery in consumer discretionary spending. Conversely, the decline in Technology and Life Sciences could raise questions about whether these sectors are facing a temporary slowdown or more structural challenges.
The SBEI's reflection of ongoing hiring despite the potential for higher interest rates speaks to the underlying strength of the small business sector. However, the cautionary note regarding the sustainability of this momentum in a higher rate environment warrants attention. Investors should consider the impact of monetary policy on small business borrowing costs and consumer spending, which could dampen growth prospects.
Moreover, the mention of a potential Federal Reserve rate cut, albeit not substantial, introduces an element of uncertainty into the market outlook. The interplay between employment trends and monetary policy will be critical for investors monitoring the resilience of the small business sector and its implications for the broader economy.
The CBIZ Small Business Employment Index reported a minor uptick in hiring for the second straight month
“Small businesses continued to hire in March, reflecting the ongoing theme of strength and resilience within the American economy,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “With the broadening upward momentum in the capital markets, it's clear that Main Street is also capitalizing on this positive trend.”
The Bureau of Labor Statistics’ employment report indicated hiring growth that beat expectations. The March reading showed an overall increase of 303,000 private-sector jobs. The national unemployment rate fell slightly to
On a regional basis, the Northeast (
On an industry level, gains in employment were seen in Administrative and Support Services; Agriculture, Fishing and Hunting; and Arts, Entertainment and Recreation. Industry decreases were seen in Insurance, Technology and Life Sciences, and Wholesale Distribution.
Rathbun added, “Looking ahead, it will be crucial to watch whether this current economic momentum is sustainable in the higher rate environment. Even if the Federal Reserve cuts interest rates, it won’t be a substantial amount.”
To view an infographic with data from the employment index, visit the CBIZ website.
Additional takeaways from the March SBEI include:
March’s snapshot:
Industries at-a-glance: Administrative and Support Services; Agriculture, Fishing and Hunting; and Arts, Entertainment and Recreation experienced hiring gains. Decreases were seen in Insurance, Technology and Life Sciences, and Wholesale Distribution.
Geographical hiring: Increases were seen in the Northeast (
What’s next? Heading into the second quarter, small businesses will need to continue to be resilient in this economy. Whether small businesses can continue this hiring trend is up in the air.
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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Alex Ortiz
Gregory FCA for CBIZ
Alexo@gregoryfca.com
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Source: CBIZ
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