According to the ADP National Employment Report, small businesses created 25,000 new jobs in August. August saw job growth slowing for a second-straight month. Private employers created 132,000 jobs in August, a step down from the month before, when the economy created nearly 270,000 jobs. Payroll growth also slowed in July when compared to June of this year.
August 2022 ADP Small Business Report
ADP’s data showed while companies with 500 or more employees grew by 54,000 and medium-sized businesses added 53,000, those with fewer than 50 employees saw a 25,000 gain.
Despite the increase in hiring by small businesses with fewer than 19 workers saw payrolls plunged by 47,000 last month. However, businesses that employ between 20 and 49 employees actually saw their hiring grow by 72,000- resulting in a net growth of employment by small businesses to reach 25,000. Employment among businesses employing fewer than 19 employees grew by 5.4% from last year while those employing between 20 and 49 employees grew by 7.2%.
How did Industries Fare?
Of the 132,000-job growth, the service sector which includes leisure and hospitality, trade, transportation, and utilities showed the most growth with 110,000 new jobs. The leisure and hospitality saw a sharp increase in payroll by 96,000 while trade, transportation, and utilities saw 54,000 new jobs.
Declines in employment were also seen in industries that include information systems, financial activities, professional & business services, and education and health services. Hiring declined by 20,000 in financial activities, 14,000 in professional and business services, and 15,000 in education and health services.
Job growth was strongest in the South and West. The Southern region of the US saw some 76,00 new jobs with job gains being made in South Atlantic (33,000), East South Central (24,000), and West South Central (19,000). This is followed by the Western part of the nation which saw some 40,000 new jobs.
Wages also saw growth for businesses with fewer than 19 workers, seeing a 5.4% increase in wages while those with less than 50 employees saw growth in wages of 7.2%. This is an improvement from early 2021 when annual pay increases were running at about 2 percent.
“Our data suggest a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals. We could be at an inflection point, from super-charged job gains to something more normal,” said Nela Richardson, chief economist, ADP.
The New ADP Report
The ADP report has been paused for two months as the company reworked the methodology for the jobs data and started collaborating with the Stanford Digital Economy Lab.
According to ADP, these are the new parameters for the new reports:
- The ADP Research Institute (ADPRI) is advancing U.S. labor-market analysis by partnering with Stanford University’s Stanford Digital Economy Lab to produce new measures of private-sector employment with a focus on both jobs and wages.
- The new ADP National Employment Report in collaboration with Stanford University uses fine-grained, high-frequency data on jobs and wages to deliver a richer and more useful analysis of the labor market.
- Our new, independent indicators of U.S. employment will help answer key economic and business questions and offer insights to a broader audience.
- The new National Employment Report presents independent measures of the U.S. labor market rather than a forecast of the Bureau of Labor Statistics (BLS) monthly jobs report. The new measures leverage the jobs and wage data of 26 million workers to provide a representative picture of the U.S. labor market that will complement official government data.
This article, “Small Businesses Created 25,000 New Jobs in August” was first published on Small Business Trends