Market Overview

Seasonal Forces Lift Small Business Hiring in May as Reported by CBIZ Small Business Employment Index

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The CBIZ
Small Business Employment Index (SBEI), which tracks hiring trends among
thousands of companies that employ 300 or fewer employees across the
country, reported that small businesses increased their employee
headcounts by 1.12 percent in the month of May.

May is typically a strong month for small business hiring thanks to the
warmer weather bringing back seasonal jobs this time of year. While this
year's May recording is largely in line with the historical average of a
1.11 percent headcount increase, political forces might have held back
small businesses from hiring even more.

"While small businesses increased headcounts in May at a pace mostly in
line with historical averages, we believe some slack remains in the
market thanks in part to Washington's inability to secure fiscal policy
changes around healthcare and taxes," says Philip Noftsinger, president
of CBIZ Employee Services Organization. "With uncertainty lingering
surrounding future healthcare costs and tax rates, we believe some small
businesses are remaining on the sidelines until Congress can provide
clarity on these issues."

ADP and Moody's Analytics' report exposed a larger than anticipated
growth in private sector hiring, reporting 253,000 new jobs were added
in May, nearly 88,000 more than expected.

To view an infographic with data from the employment index, visit
the CBIZ blog
.1

Additional takeaways from the May SBEI include:

  • May's snapshot: Compared to the April reading of the SBEI, 28
    percent of companies in the index increased staff, 50 percent made no
    changes and 22 percent decreased headcounts. Since the SBEI's
    inception in 2009, the month of May has never printed a negative
    reading due largely to seasonal factors.
  • Industries at a glance: Nearly every industry represented in
    the SBEI grew their staff totals, with the exception of companies in
    Manufacturing, which reported a slight decrease of 0.17 percent.
    Rental and Leasing Services represented the largest hiring boost,
    increasing headcounts by 8.9 percent in May. Agriculture, Arts and
    Entertainment, Utilities, Real Estate, Transportation, Construction
    and Retail Trade also saw significant growth in May.
  • Geographical Hiring: Regionally, the Northeast increased hiring
    by 2.27 percent. The Southeast and Central regions also realized
    substantial increases, reporting a 1.37 percent increase and 1.15
    percent increase, respectively. The West region decreased moderately
    by 0.54 percent.
  • What's next? In June, we expect small businesses to continue
    hiring, but at a slower pace than witnessed in May, which was largely
    driven by seasonal tailwinds. Additionally, the Federal Reserve has
    been signaling that it will raise rates later this month, which could
    slow hiring and impact debt servicing costs and credit access for
    small business owners. Further, if Congress fails to make progress on
    legislation impacting healthcare costs and tax rates, many small
    business may refrain from hiring more aggressively. On the other hand,
    any emerging clarity could ramp up hiring over the next few months.

CBIZ Payroll Services manages payroll services for more than 4,000
businesses. Its index reflects a broad array of industries and
geographies corresponding to the markets across the U.S., where CBIZ
provides human capital services. The data represented by the SBEI is
derived from a segment of employers not completely accounted for by the
ADP and Federal BLS employment reports.

Editor's note:

(1) The SBEI Illustration is licensed under a Creative Commons
Attribution-NoDerivs 3.0 Unported License. Based on our work at
http://www.cbiz.com/insights-resources/blog.

Follow CBIZ on Twitter at @CBZ
or on
Facebook.

About CBIZ, Inc.

CBIZ, Inc. provides professional business services that help clients
better manage their finances and employees. CBIZ provides its clients
with financial services including accounting, tax, financial advisory,
government health care consulting, risk advisory, real estate
consulting, and valuation services. Employee services include employee
benefits consulting, property and casualty insurance, retirement plan
consulting, payroll, life insurance, HR consulting, and executive
recruitment. As one of the largest accounting, insurance brokerage and
valuation companies in the United States, the Company's services are
provided through more than 100 Company offices in 33 states. CBIZ
Employee Services Organization is a division of CBIZ Benefits &
Insurance Services, Inc.

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