Hiring Growth for Small Businesses Continues in March

Rhea-AI Summary

The CBIZ Small Business Employment Index reported a 0.18% increase in March, reflecting small businesses' resilience in the U.S. economy. The Bureau of Labor Statistics and ADP reports also showed positive hiring trends, with gains in various regions and industries.

Insights

Economist

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.

Market Research Analyst

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.

Financial Analyst

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

CLEVELAND--(BUSINESS WIRE)-- The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted increase of 0.18% in March as the U.S. economy continues to show strength and resilience. The CBIZ SBEI tracks payroll and hiring trends for over 3,000 companies that have 300 or fewer employees, providing broad insight into small business trends.

“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 3.8%. 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 March reading showed an overall increase of 184,000 private-sector jobs for the month. Small businesses accounted for an increase of 16,000 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.

On a regional basis, the Northeast (0.22%), Central (0.22%), and Southeast (0.09%) regions all experienced a hiring increase. The West (-0.02%) was the only region to experience a decline.

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: 23% of companies in the index increased staffing, 60% made no change to their headcounts and 17% reduced employment totals.

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 (0.22%), Central (0.22%), and Southeast (0.09%). The West (-0.02%) region experienced a decrease.

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.

Follow CBIZ on Twitter at @CBZ or on Facebook.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240409607074/en/

Media

Alex Ortiz

Gregory FCA for CBIZ

Alexo@gregoryfca.com

610-228-2119

Source: CBIZ

FAQ

What was the percentage increase reported by the CBIZ Small Business Employment Index in March?

The CBIZ Small Business Employment Index reported a 0.18% increase in March.

How many private-sector jobs were added according to the Bureau of Labor Statistics' employment report?

The Bureau of Labor Statistics' employment report indicated an overall increase of 303,000 private-sector jobs.

Which regions experienced a hiring increase according to the CBIZ Small Business Employment Index?

The Northeast, Central, and Southeast regions all experienced a hiring increase.

Which industries saw employment gains according to the CBIZ Small Business Employment Index?

Administrative and Support Services; Agriculture, Fishing and Hunting; and Arts, Entertainment and Recreation experienced hiring gains.

What did Anna Rathbun mention about the economic momentum in the higher rate environment?

Anna Rathbun mentioned it will be crucial to watch whether the current economic momentum is sustainable in the higher rate environment.