Study: Small Biz Employment Growth Slowing

Small businesses last year experienced the slowest year of employment growth since 2011, according to a recent index release. The monthly Paychex | IHS Small Business Jobs Index decreased in December to 100.37, a consistent downward slide the last 20 months since peaking in April 2014 at 101.26.

While December 2015 marked the 51st consecutive month of job gains, the growth rate for the year declined by .19%. The Index found that service jobs continue to command an authoritative lead among industries ranked highly for growth. “Service is a real positive,” said Paychex CEO Marty Mucci. “People are spending discretionary income now. So they are feeling a little better as a consumer.”

Construction, leisure and hospitality are ranked the top three industries for healthy small business growth. The Index found that the Mountain region of the country (comprised of Montana, Idaho, Colorado, Wyoming, Nevada, Utah, Arizona and New Mexico) was the top-performing area in the United States, and the Mid-Atlantic region had the lowest rate.

Despite those findings, a recent study found positive movement in overall payroll growth. The ADP Research Institute released data indicating that companies increased payrolls in December by the most in 12 months. The increase of 257,000 is the largest jump in payroll numbers since December 2014, and exceeds economists’ recent estimates.

Goods-producing industries increased headcount by 23,000, while construction increased by 24,000 and factories by 2,000. Service companies’ payrolls grew by 234,000 employees.

“Strong job growth shows no signs of abating,” said Mark Zandi, chief economist at Moody’s Analytics Inc. which produces the figures with ADP. “If this pace of job growth is sustained, which seems likely, the economy will be back to full employment by mid-year.”

The data reported by ADP, based on reports from businesses with an estimated 24 million workers on their combined payrolls, indicate faster wage growth in 2016 and accelerated consumer spending.