Small businesses keep shrinking, report shows


Small business hiring dropped off slightly in July, continuing an awfully slow summer on Main Street. (Mark Lennihan/AP)

In terms of job creation, small businesses are still slogging through the same sluggish growth as the broader economy, according to two new employment surveys.

Small employers let go of more workers than they hired for the third consecutive month in July, according to the latest report by the National Federation of Independent Business, the nation’s largest small business advocacy group. In all, employment dropped by an average of 0.11 workers per company, an ever faster rate of reduction that the 0.99 percent drop in June.

Only half of small employers have attempted to hire someone in the past three months, and a large number of those had trouble finding qualified applicants, the poll showed.

Related: On a brighter note, new businesses are starting to create more jobs

Small business owners also pulled back their expectations for sales growth over the next three months.

“Overall, there is not a lot of promise for new job growth,” NFIB chief economist Bill Dunkelberg said in a statement outlining the findings.

The overall economy is not faring much better. Bureau of Economic Analysis statistics released Wednesday show the economy grew at a rate of 1.7 percent during the second quarter of the year — slightly faster than the first three months of the year and better than expectations, but still behind the pace of previous post-recession recoveries.

Dunkelberg noted that the most recent two estimates of quarterly economic were later revised downward, “so even that lousy reading may be revised downward,” he warned.

A similar poll released the same day by payroll processing firm ADP showed that companies with fewer than 50 employees added a surprisingly strong 82,000 jobs in July, but even that was slightly down from June’s 84,000.

The brightest spot in the report came from the professional and business services sector, which posted an additional 49,000 jobs last month. Construction job gains also increased from last month to 22,000.

Follow On Small Business and J.D. Harrison .

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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