Closing out 2020 with signs of optimismIn its Small Business Index report, CBIZ measures the impact of the vaccination rollout on the levels of optimism of small business owners. Read more here.
January 08, 2021– CLEVELAND–(BUSINESS WIRE)–The CBIZ Small Business Employment Index (“SBEI”) reported growth in December, closing out 2020 with a seasonally adjusted increase of 0.32%. While the small business sector has grappled with another surge in COVID-19 cases, analysts are looking toward consumer sentiment and optimism stemming from vaccine efforts to reinforce economic recovery in 2021. The CBIZ SBEI tracks payroll and hiring trends for over 3,500 companies that have 300 or fewer employees, providing broad insight into small business trends.
The CBIZ Small Business Employment Index (SBEI), which tracks hiring trends among thousands of companies across the U.S. with 300 or fewer employees, reported a 0.32% seasonally adjusted gain in small business hiring in December 2020. This growth reflects positively on the small businesses landscape, considering the recent third surge in coronavirus cases.
The index reported that 27.63% of companies heightened headcounts. Conversely, 51.52% reported consistent hiring levels and 20.85% decreased staffing. Looking at specific industries in the index, hiring increased in Healthcare, Financial Services, Real Estate, Non-Profits and Retail Trade, but declined in Technology and Life Sciences, along with Transportation. Hiring also decreased in Accommodation and Food Services, potentially due to pandemic-related restrictions.
Weathering The COVID Storm
“The data indicates that small businesses weathered the third COVID-19 surge in December, and we expect positive trends to continue into early 2021, with vaccine optimism likely to bolster consumer sentiment through the early part of the year,” said Philip Noftsinger, Executive Vice President, CBIZ, Inc. “However, if general sentiment surrounding the pandemic outlook does not improve in Q2, continued economic recovery could taper.”
Data from the ADP and Moody’s employment report was not as bullish as the CBIZ SBEI. According to the ADP and Moody’s data, private-sector jobs dropped by 123,000 on a month-over-month, seasonally adjusted basis. Small business jobs, in particular, decreased by 13,000. The ADP and Moody’s report counts small businesses as companies with 49 or fewer employees, while the CBIZ SBEI uses data from companies with 300 employees or fewer.
Breaking the data down by region, hiring declined mildly in the Central U.S. (-0.15%) but rose in the Northeast (1.18%), Southeast (1%) and West (0.44%). Positive readings swept the index’s state reopening data, with increases for states that opened on or before May 15 (0.97%) and states that opened after May 15 (0.23%).
Sporadic Growth Trends
Although some industries increased hiring, growth did not occur across the board. Hiring climbed in Healthcare, Financial Services, Real Estate, Non-Profits and Retail Trade, yet decreased in Technology and Life Sciences, Transportation, and Accommodation and Food Services. The negative trend in Accommodation and Food Services could stem from renewed COVID-19 restrictions.
“Based on the current vaccination rate in the U.S., we still have a long road ahead,” Noftsinger noted. “Yet, we are confident that small business trends will end 2021 with vast improvement over the past few quarters.”
To view an infographic with data from the employment index, visit the CBIZ website.
Additional takeaways from the December SBEI include:
- December’s snapshot: 27.63% of companies in the index added to staffing, 51.52% maintained headcounts and 20.85% decreased employment.
- Industries at a glance: Hiring fared favorably for Healthcare, Financial Services, Real Estate, Non-Profits and Retail Trade. This was not the case for Technology and Life Sciences, Transportation, and Accommodation and Food Services, where hiring receded.
- Geographical hiring: Only the Central U.S. reported a hiring decline. Hiring saw the most robust increase in the Northeast, followed by the Southeast and then the West.
- What’s next? Moving past the holiday shopping season, consumer sentiment remains key, and the COVID-19 vaccination rate will likely help determine small business hiring trends in 2021.
About CBIZ, Inc.
CBIZ, Inc. provides professional business services that help clients better manage their finances and employees. CBIZ provides its clients with financial services including accounting, tax, financial advisory, government health care consulting, risk advisory, real estate consulting and valuation services. Employee services include employee benefits consulting, property and casualty insurance, retirement plan consulting, payroll, life insurance, HR consulting and executive recruitment. As one of the largest accounting, insurance brokerage and valuation companies in the United States, the company’s services are provided through more than 100 company offices in 33 states. CBIZ Employee Services Organization is a division of CBIZ Benefits & Insurance Services, Inc.