Maybe there has been a huge stock market recovery and maybe consumer sentiment has screamed higher in the three weeks since the presidential election. The overall employment picture remains one of what is considered to be full employment, more or less. That just might not translate directly to small businesses continuing to hire at the same rate as before.
The Paychex IHS Small Business Jobs Index was released on Tuesday morning, ahead of the ADP national employment report and ahead of Friday’s key payrolls report from the U.S. Department of Labor. It shows that small business job growth moderated slightly in November, falling by 0.02% from the previous month. The national index has now decreased from 100.70 back in August to 100.38 in November.
It goes without saying that this is a tiny drop. What stands out though is that this marked the third consecutive decline. Paychex and IHS maintain that small business employment growth levels remain consistent with the same period a year ago.
As far as the year’s average, the national index has averaged 100.64, versus the 2015 average of 100.59.
Martin Mucci, Paychex president and CEO, said:
Given the election results, small business owners seemed to take a ‘wait and see’ attitude. We’ll be watching the next few indexes closely to see what the numbers may indicate about the sentiment and outlook for small business.
This index is released each month the Tuesday before the Bureau of Labor Statistics (BLS) Employment Situation report. Its aim is to offer a leading indicator of job conditions. An upward trend represents a strengthening job market, while a downward trend is a sign of a slowdown.
It is important to remember that hiring takes longer to occur than other economic gains you might expect. There was an immediate boost to consumer sentiment and to some behavior by consumers, but it generally takes businesses (large and small) quite a bit longer to suddenly add many more employees.
As for the rest of the week ahead, here are the key economic reports around employment for November (consensus estimates from Bloomberg):
- Wednesday ADP payrolls expected to be up 160,000.
- Thursday BLS weekly jobless claims expected to be 253,000.
- Friday BLS payrolls expected 170,000 on nonfarm and 155,000 on private sector.
- Friday BLS unemployment expected to be 4.9% (flat).
- Friday BLS average hourly earnings expected to be up 0.2%.