Jobs Up, but Small Business Survey Reports Little Gain
Are small businesses hiring?
If you look at today’s job numbers, you’d say yes. The private sector added 243,000 jobs across the economy in January, and the consensus among economists and other job-market watchers is that the bulk of those people were hired by small businesses. That number drove the unemployment rate down to 8.3 percent. In addition, revisons to jobs numbers between November and December added another 160,000 jobs.
But the National Federation of Independent Business survey on hiring for January has a different view of what small businesses are doing on the hiring front: they’re not.
Or, at least not in any great numbers. According to the NFIB report, released early today, as many firms cut employees as increased hiring. However, the survey also reports that job openings are the highest in 40 months, and small businesses anticipate a lower unemployment rate in the coming months.
We have to see if they hold up,” William Dunkelberg, chief economist at NFIB told CNBC.com. “We may be underestimating how much we’re getting out of the energy states; in western Pennsylvania job openings are very strong, and also in Texas. We’ll have to take time to parse numbers and see where jobs are coming from.”
The NFIB survey reported a “break even” number in hiring, with 11 percent of business owners adding an average of 3.0 workers per firm, and 11 percent reducing employment by an average of 2.9 workers per firm. The good news: The percent of firms reducing employment was the lowest since 2007.
Diane Swonk, chief economist with Mesirow Financial in Chicago, talking to CNBC.com before the jobs numbers were released, said she does see an uptick in small business hiring. “We know anecdotally that big businesses are relying on small businesses for core innovation. There is some seed capital, which explains some of the small business lending.”
And, while there is some skepticism around the jobs numbers — job-seekers who have dropped out of the workforce might lower the unemployment number, say some — the numbers are, at least, headed in the right direction.
"The market was looking for 150,000, and we got 257,000," said Dunkelberg. "We'll rejoice, and hope for another good month next month."