June 28, 2016

Small Business Employment Continues to Rise, Says ADP Jobs Report


ADP Jobs Report
Job growth among small businesses continued to rise in February, sparking optimism that the trend will persist for the remainder of the year.

Small businesses with 1 to 49 employees created a total of 76,000 jobs in February, according to the monthly jobs report from human resources management company ADP, in partnership with Moody’s Analytics.

The number represents more than 35 percent of the overall job market growth and is, coincidentally, equal to gains by large companies — those with 500 or more employees. Companies with 1 to 19 employees hired 37,000 new workers while those with 20 to 49 employees brought on 38,000, says the report.

By sector, goods-producing companies with 1 to 19 employees hired 2,000 new employees while service companies hired 35,000. Companies with 20 to 49 employees saw no growth in the goods-producing sector, attributing all growth to service businesses.

Newly updated numbers show that February job growth is in line with January’s report. Previously, January showed gains of 79,000, but those figures have been downwardly revised, to 75,000.

According to Mark Zandi, chief economist at Moody’s Analytics, the pace of job growth is double what is necessary to absorb the labor force increase.

“For the first time in 10 years, the economy is back to full employment, which means that everyone who wants a job can find one,” Zandi says.

Three factors contribute to the sustained growth, says Zandi: A bottoming out of oil prices at around $30 per barrel, stabilization of the yuan in China, and financial market conditions that have remained steady for the last couple of weeks.

“It was expected that recent volatility in the global financial markets would have resulted in fallout in the economy, but that has not been the case,” Zandi says. “Despite market prices that were previously overvalued, there has been no weakening in the labor market. The American job machine remains in high gear. Energy and manufacturing remain blemishes on the job market, but other sectors continue to add strongly to payrolls.”

Zandi expects the economy should show full employment by mid-year, with unemployment rates falling to 4.5 percent.

With the labor market tightening, finding and keeping good employees is at a premium, which means it will become necessary for small businesses to offer incentives beyond just an increase in pay.

To remain competitive, companies should consider augmenting their benefits package with new features that include flexible work schedules, advancement opportunities and a stronger emphasis on training.

Image: ADP

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Paul Chaney


Paul Chaney Paul Chaney is a Staff Writer for Small Business Trends. He covers industry news, including interviews with executives and industry leaders about the products, services and trends affecting small businesses, drawing on his 20 years of marketing knowledge. Formerly, he was editor of Web Marketing Today and a contributing editor for Practical Ecommerce.

2 Reactions

  1. Each person who got a new job is worth celebrating. Tens of thousands? Woohoo!

    But really, this is encouraging since hiring is a big deal for SMBs and they only do it after the growth justifies it.

  2. With this, is it safe to say that the small business industry is also expanding? Since they are employing more people, I think that is quite good for the industry.

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