Worksite Employment Trends

Small Businesses Kick-off 2024 With A Decline In Hiring

Signals a pivotal moment for small businesses

The CBIZ Small Business Employment Index reported a slight hiring decrease in January that met seasonal expectations.

February 06, 2024 — CLEVELAND–(BUSINESS WIRE)–The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted decrease of 0.12% in January. Historically, the number was weaker than years past, but inline with expectations for the month. The CBIZ SBEI tracks payroll and hiring trends for over 2,900 companies that have 300 or fewer employees, providing broad insight into small business trends.

“January’s modest hiring decrease aligns with seasonal trends, yet signals a pivotal moment for small businesses,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “They’re not just navigating the post-holiday shift, but also positioning themselves for the next phase of the evolving labor market.”

National Unemployment Rate Holds at 3.7%

The Bureau of Labor Statistics’ employment report indicated hiring growth that crushed expectations. The January reading showed an overall increase of 353,000 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 January reading showed an overall increase of 107,000 private-sector jobs for the month. Small businesses accounted for an increase of 25,000 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 decrease in January. The Northeast (-0.14%), Southeast (-0.12%), Central (-0.11%) regions experienced similar losses followed by the West (-0.08%) region with a flat reading.

They're not just navigating the post-holiday shift, but also positioning themselves for the next phase of the evolving labor market...

On an industry level, gains in employment were seen in Government, Information, and Management. Industry decreases were observed in Administration and Support Services; Arts, Entertainment and Recreation; and Technology and Life Sciences.

Rathbun added, “January’s stellar BLS jobs report showed an unemployment rate that remains historically low, continuing the notion that the labor market is tight and strong. But there is evidence in sector-specific data that does not support the argument that the economy is roaring.”

Additional takeaways from the January SBEI include:

  • January’s snapshot: 14% of companies in the index increased staffing, 58% made no change to their headcounts and 28% reduced employment totals.
  • Industries at-a-glance: Government, Information, and Management experienced hiring gains. Decreases were seen in Administration and Support Services; Arts, Entertainment and Recreation; and Technology and Life Sciences.
  • Geographical hiring: The Northeast (-0.14%), Southeast (-0.12%), Central (-0.11%), and West (-0.08%) regions all experienced hiring losses.
  • What’s next? January’s hiring decrease suggests small businesses are entering a period of caution, with an eye on navigating the traditionally slower post-holiday months in a tight labor market.

 

 

(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.
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.