The Washington Post

Hiring by small businesses slows, contribution to broader recovery shrinks

Here, a career fair in Rolling Meadows, Illinois. Five years after the Great Recession ended, most states still haven’t regained all the jobs they lost. (M. Spencer Green/AP)

Small businesses are still adding jobs, just not at nearly the pace they were earlier this summer — a trend that holds true for the broader economy, too.

Small firms added 78,000 workers in August, a second straight month of decline after peaking at 133,000 jobs added in June, according to new data released by payroll processing firm ADP. While that’s up from August of last year (73,000), it’s the first time since this spring that small businesses haven’t surpassed their monthly average from last year (roughly 80,000 jobs added per month).

On the whole, the economy added 204,000 jobs in August, down from 212,000 last month and well off the hot pace recorded in June (297,000). Still, this marks the fifth straight month of gains exceeding 200,000—what Carlos Rodriguez, ADP’s top executive in a statement called “an encouraging trend for the U.S. labor market.”

“Steady as she goes in the job market,” Mark Zandi, chief economist for Moody’s Analytics, wrote in the report released by ADP. “Businesses continue to hire at a solid pace. Job gains are broad based across industries and company sizes.”

Indeed, the nation’s smallest firms (fewer than 20 workers) last month added the same number of positions, 39,000, as their slightly larger counterparts (between 20 and 50 workers). And in keeping with a longstanding trend, most of the positions added by small employers were at service-producing firms, with merely 12,000 of the 78,000 jobs added by goods-producing small businesses.

Collectively, small businesses were responsible for about 38 percent of the total jobs added by businesses in August. That’s the second month in a row in which their contribution to total gains has dipped below 40 percent — not a favorable sign for the sector so often lauded as the nation’s job engine.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.



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