Small business hiring plans hit post-recession high — but are they realistic?


On Main Street, hiring plans hit a post-recession high in August, according to a poll released Tuesday. (Mike Blake/Reuters)
September 11, 2013

The number of small business owners planning to hire new workers has jumped to its highest mark since before the recession, according to a new poll, a sign that a slow recovery on Main Street may pick up in the coming months.

But some question whether employers will actually follow through on their plans.

The National Federation of Independent Business posted the survey results on Tuesday, which show that 16 percent of small employers are planning to add jobs in the next 12 months, up from 9 percent in July. Capital spending and inventory investment plans edged up last month, too.

Still, the group’s overall optimism index held fairly steady, as employers’ strong outlook about their own firms was tempered by their bleak forecasts about the overall economy.

“The August reading provided us with a rather perplexing set of statistics,” NFIB Chief Economist Bill Dunkelberg wrote in the report, noting that while future hiring plans surged, actual hiring by small businesses dipped for the fourth straight month in August.

Sales were also down last month, according to the survey, yet many more business owners said they expect revenues to increase in the coming months.

It’s a sign, some say, that employers’ expectations may be a bit too optimistic.

“The extremely good news in this report is that the reading for small businesses planning on hiring is at the highest level since January 2007,” Chris G. Christopher, Jr. and Ozlem Yaylaci, economists at IHS Global Insight, wrote in a statement about the report. “But there is a major caveat: plans to hire and actually hiring are sometimes two different things.”

Despite some signs of an accelerating recovery early this year, it has been a rather weak summer in terms of hiring and growth on Main Street.

In August, employment at small firms continued a steady decline, down an average of 0.3 workers per company, according to the NFIB, and nearly four in five employers who tried to add workers reported having trouble finding qualified candidates for their openings.

A similar report from Intuit showed that small businesses cut about 1,300 jobs last month, and the group’s small business revenue index sank 0.18 percent.

Meanwhile, the Labor Department on Tuesday reported that job openings dropped to 3.7 million in July from a downwardly revised 3.9 million the previous month. That comes on the heels of a report from the agency on Friday, which showed that hiring increased but fell shy of expectations in August and was well short of previously reported estimates for June and 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 manages the Post's On Small Business blog.
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