Small business hiring cools off in July

Not quite the blistering pace reported in June


Slightly larger small businesses (more than 20 employees) created more new jobs than their smaller counterparts for the first time this year. (M. Spencer Green/AP)

Hiring by small businesses cooled off this past month, mirroring a similarly modest slowdown across the broader economy, according to a new report.

Small employers added 84,000 workers in July, down from a two-year high of 126,000 new positions added the month before, according to payroll processing firm ADP. Initially, the company had reported that small businesses (fewer than 50 employees) had added 117,000 jobs in June.

Overall, the economy added 218,000 positions in July. While that’s down from 281,000 last month, it’s otherwise the highest monthly total since November.

“The July employment gain was softer than June, but remains consistent with a steadily improving job market,” Mark Zandi, chief economist for Moody’s Analytics, said in a statement. “At the current pace of job growth, unemployment will quickly decline.”

On the small business front, one of the notable developments in this latest report is that, for the first time this year, the nation’s slightly larger small businesses, those with between 20 and 49 workers, added more jobs (50,000) than their smaller counterparts (34,000).

Conversely, there was no change in the split between service-providing and goods-producing small businesses. The latter, which have consistently been responsible for the bulk of the sector’s hiring for the past few years, added 78,000 of the 84,000 positions created by small firms in July.

In the past year, goods-producing small companies have not produced more than 18,000 jobs in single month.

One final noteworthy development — one that may concern those who laud small businesses as the country’s most reliable job creator — is that, after finally rising above 40 percent in May and June, small businesses’ contribution of total jobs slipped back to 39 percent in July.

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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