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Intuit Indexes Show Small Business Growth Slowing

U.S. small business employment continued to grow slowly in September, while hours worked and compensation rose. Revenue in August declined for the sixth consecutive month.

These are among the results for the monthly Intuit Inc. (Nasdaq: INTU) Small Business Employment and Revenue Indexes, which together provide a current picture of the economic health of the nation’s small businesses.

The Small Business Employment Index shows that employment rose by 0.2 percent in September, which is an annualized growth rate of 2.5 percent. The growth equates to approximately 40,000 new jobs created in September, although Intuit is recalibrating the employment index and expects these numbers to change. Average monthly compensation grew by 0.6 percent, or $17, an increase from the growth of $2 seen last month. Average monthly hours worked increased by 0.18 percent, or 12 minutes. The index is based on data from Intuit Online Payroll and covers the period from January 2007 through Sept. 23.

The Small Business Revenue Index indicates that August small business revenue fell by 0.4 percent from the previous month. Continuing July’s trend, the retail industry, along with the accommodation and food services sector, saw the biggest declines at minus 0.7 percent respectively. Construction followed with a decline of 0.6 percent. The index is based on data from QuickBooks Online and covers the period from January 2005 through Aug. 31.

“This month’s indexes bring both good and bad news,” said Susan Woodward, the economist who worked with Intuit to create the indexes. “The bad news is that while revenue rose earlier in this tepid recovery, they are now dropping for most industries. In addition, small business employment is growing very slowly, and is essentially flat. Couple that with the slow employment growth of less than one-tenth of a percent for big businesses, and we see a slim chance of full employment anytime soon.

“The good news is that more people are going into business for themselves. After five years of declining self-employment beginning in January 2007, we began seeing a big comeback starting in November 2011. Nearly 600,000 additional self-employed folks have been added since then, and there are now 14.2 million people who are self-employed. One theory is that the decline in revenue per business may reflect the entry of these new businesses into the economy.”

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