The November ADP Small Business Report says there was an increase of 46,000 jobs for the month in private-sector small business employment.
November 2018 ADP Small Business Report
The ADP data for small business specifically looks at companies with 49 or fewer employees. With small businesses accounting for 58.9 million employees in the US, which is 47.5% of the country’s workforce, the ADP data plays an important role as an economic indicator.
The 46,000 jobs added in November by the small business sector is much higher than the 29,000 which was reported in October.
A closer look at the numbers reveals businesses with one to 19 employees generated 13,000 jobs, while those with 20 to 49 employees were responsible for the lion’s share of the jobs with 33,000.
Overall the national employment number was down from October’s impressive 227,000 total to 179,000. For November, midsized companies delivered the highest number of employment with 119,000 jobs, while large companies were only able to manage 13,000 jobs.
The job growth by midsize businesses was addressed by Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, who in the press release said the reason might be because these companies are insulated from global changes.
Unlike large enterprises with a global presence who are currently dealing with a volatile environment, midsize businesses operating in country don’t have to face those same challenges directly, at least not yet.
But according to Mark Zandi, chief economist of Moody’s Analytics, even though job growth is strong it has likely peaked. Zandi goes on to say, “This month’s report is free of significant weather effects and suggests slowing underlying job creation. With very tight labor markets and record unfilled positions, businesses will have an increasingly tough time adding to payrolls.”
The service sector is again the leading producer of jobs with 163,000 of the 179,000 total. Professional/business and education/health services were responsible for 59,000 and 49,000 jobs respectively.
Challenges for Small Businesses
According to ADP, in 2018 small businesses have been averaging 43,000 new jobs per month to date, with only one month left. This is considerably lower than the 61,000 average of 2017.
One of the biggest challenges small businesses faced in 2018 was their inability to find qualified candidates to fill open positions. This could be one of the reasons fewer jobs were being filled by small firms.
This has resulted in qualified talent asking for higher wages and pricing out many small businesses who are competing with larger organizations who have the budgets to make the hires.
The final or December 2018 ADP National Employment Report will be released at 8:15 a.m. ET on January 3, 2019.
The ADP National Employment Report is aggregated from the ADP payroll data of 411,000 U.S. clients who employ around 24 million workers in the U.S.
Image: ADP