Small Biz Rebound?

Small businesses are showing signs of an economic rebound. This is the main finding of the recent Intuit Small Business Employment Index, a new monthly report that provides unique, near real time insight into employment trends of the smallest of small businesses. Mountain View, CA based, Intuit Inc., a leading small business payroll provider, based its report on data from businesses with fewer than 20 employees, which comprise 87 percent of the total U.S. private employer base. While the Intuit Small Business Employment Index offers macroeconomic insight about the economy generally, it does not indicate or represent changes in Intuit’s business results for any period.

“Employment for these small businesses began trending upward in mid 2009, a good sign for the overall economy,” said Dr. Susan Woodward, the nationally recognized economist who worked with Intuit to create the index. “This index is an indicator that the small business employment situation may be getting better,” added Woodward, who was chief economist of the U.S. Department of Housing and Urban Development, and later of the U.S.

Securities and Exchange Commission. “Small businesses generally recover faster than larger businesses, because they begin hiring sooner than big businesses. To see these figures showing a rise in employment at small businesses is very heartening, at a time when good news is scarce.”

Although overall employment has declined since December 2007, the most recent monthly change in the Intuit Small Business Employment Index is positive. While this month over month change is small, up 0.2 percent on a seasonally adjusted basis, it continues an upward trend that began around the middle of 2009. Employment grew nearly 0.8 percent over the past eight months, which is a 1.1 percent annual rate. This translates into nearly 40,000 new jobs for February 2010, and nearly 150,000 new jobs since June 2009.

In addition to analyzing small business employment, the Intuit Index also measures compensation and hours worked. Monthly average compensation per employee has been flat since September 2008. It remained flat in February at $2,559, down by 0.1 percent compared to the prior month. Due to volatility in compensation, this is still considered flat and does not represent a downward trend. Hourly employees worked an average of 101.4 hours in February.

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