Small-Business Hiring Offers Signs Of Hope

Updated with new information.

MOUNTAIN VIEW, Calif. ( TheStreet) -- There are initial signs small-business hiring is picking up after a disappointing spring.

Businesses with fewer than 20 employees added 45,000 positions to their payrolls from May 24 to June 23, compared with a revised 60,000 for the prior four weeks, according to the Intuit ( INTU) Small Business Employment Index, released on Wednesday.

Yet there are signs of encouragement on the hiring front, experts say.
Small-business experts agree hiring is improving slightly, but one says that what's behind a rise in hours worked is not totally clear.

Private-sector employment in the U.S. rose by 157,000 jobs in June, with small businesses contributing 88,000, or 56%, of the total, according to the ADP National Employment Report released Thursday. The results are a positive sign, given that just 28,000 small-business jobs (out of an overall 36,000 private-sector jobs) were added in May, according to ADP.

Small businesses added 12,000 jobs in the goods-producing sector and 76,000 in the service-providing sector, according to ADP. The survey measures small businesses as those with fewer than 50 employees.

"This month's jobs figures are a significant improvement over May's, particularly in light of last quarter's disappointing 1.9% GDP growth," says Gary Butler, ADP's CEO. "Given such strong employment results despite poor GDP, I am optimistic we will see improving job growth in the second half of the year."

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The Intuit monthly report found hourly employees working at small businesses averaged 108.7 hours in June, equating to a 25.1-hour workweek. This was 0.27% better than the revised May figure of 108.4 hours and 0.74% better than original estimates for total hours worked, according to Intuit.

Roughly 65% of small-business employees are hourly. Approximately 29.6% of them worked more than 140 hours during the four-week period, up from 27% in May.

Average monthly pay for all small-business employees also rose in the June period by 0.18%, to $2,643 per month, and 0.72% better than original average monthly pay estimates for May.

The equivalent annual wages would be about $31,700 per year, which is part-time work for many small-business employees, Intuit says.

Since the hiring trend began in October 2009, small businesses have created 820,000 jobs, Intuit says. The Index is based on approximately 66,000 small-business employers who use Intuit's Online Payroll.

"The small-business employment figures we follow look more hopeful this month," according to a statement by Susan Woodward, the economist who worked with Intuit to create the index. "The progress is pretty much national, not confined to just some regions. At the same time, the revised numbers for May look better than we thought, so altogether there is more cause for optimism."

While it's reassuring to see employees working more hours, "it's not clear what's driving this rise," Woodward says.

William C. Dunkelberg, chief economist for the National Federation of Independent Business, notes that "the job picture is a bit brighter than June's actual dismal performance."

According to a June poll by the NFIB on 766 member respondents, 15% reported unfilled job openings (up 3 points from May), indicating a decline in the unemployment rate.

Over the next three months 11% plan to increase employment (down 2 points), and 7% plan to reduce their workforce (down 1 point).

That yields a seasonally adjusted net 3% of small-business owners planning to create jobs, a 4-point gain from May, the NFIB says.

-- Written by Laurie Kulikowski in New York.

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