Small business hiring declines sharply in OctoberThe CBIZ Small Business Employment Index reported a decrease in hiring for the third straight month, highlighting the emerging weakness in the labor market.
November 08, 2022 08:30 AM Eastern Standard Time–CLEVELAND–(BUSINESS WIRE)–The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted decrease of 1.94% in October. The reading showed a decline in hiring for the third straight month, highlighting the emerging weakness in the labor market. The CBIZ SBEI tracks payroll and hiring trends for over 3,600 companies that have 300 or fewer employees, providing broad insight into small business trends.
“The expectation of a recession is beginning to materialize in the labor market,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Retirement & Investment Solutions. “There have been some discrepancies in the data for the last several months, with the nonfarm payroll showing strength while the household survey has shown weaker nuances, pointing to uncertainty among businesses.”
Reported Hiring Increases
Meanwhile, the ADP employment report indicated hiring growth among small, medium-sized and large companies. Its October reading showed an overall increase of 239,000 private-sector jobs for the month. Small businesses accounted for a slight 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.
The CBIZ SBEI data reported an increase in hiring for the Western region (1.85%) for the second straight month, but the other regions across the United States experienced significant declines. The Southeast (-2.61%) reported the largest decrease, followed by the Northeast (-2.56%) and Central (-2.22%) regions.
On an industry level, the most notable hiring increases were seen in Management, Mining, Not-for-Profit, and Wholesale Distribution. Fishing & Hunting, Information Technology, Leisure and Hospitality, and Life Sciences all experienced declines in hiring.
Rathbun added: “The data suggests hiring will be challenged by the negative headwinds impacting the economy and a pain point for small businesses as they begin to brace for a potential recession.”
To view an infographic with data from the employment index, visit the CBIZ website.
Additional takeaways from the October SBEI include:
October’s snapshot: 17% of companies in the index increased staffing, 57% made no change to their headcounts and 26% reduced employment totals.
Industries at a glance: Management, Mining, Not-for-Profit, and Wholesale Distribution saw hiring gains. Decreases were seen in Fishing & Hunting, Information Technology, Leisure and Hospitality, and Life Sciences.
Geographical hiring: The West (1.85%) experienced an increase in hiring, while the Southeast (-2.61%), Northeast (-2.56%) and Central (-2.22%) regions all saw hiring declines.
What’s next? Small businesses will need to stay resilient as they prepare for an economic recession. Continued declines in hiring and discrepancies in the establishment and household surveys should be watched closely.
The October CBIZ SBEI data follows the Q4 2022 release of the CBIZ Main Street Index, which surveyed over 1,100 businesses throughout the U.S. as they navigate the challenging economic environment.* The data reveals that 81% of businesses are expecting and preparing for a downturn in the economy. Despite their fears of a recession, 71% of respondents indicated their confidence level remains positive. Please see the CBIZ Main Street Index webpage for an interactive infographic with additional data.
*Note: Not all of those surveyed in the CBIZ Main Street Index are clients of CBIZ.
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CBIZ, Inc. 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 100 Company offices in 32 states, CBIZ is one of the largest accounting and insurance brokerage providers in the U.S. For more information, visit www.cbiz.com.