March 2012 Small Business Index Shows Strongest Employment Growth Yet
This March saw the highest single-month employment growth rate in two years, and the turnover rate at small firms remained lower than normal.
Small businesses created 65,000 new jobs in March, and the employment rate grew by 0.3 percent. While the growth was not enough to get the U.S. back to full employment, it is still a very encouraging sign, especially for the state of New York, which saw employment increase for the first time in several months.
According to the March results of the Intuit Small Business Employment Index, average monthly hours worked increased by 36 minutes (0.5 percent) and average monthly compensation rose by $18 per worker (0.7 percent).
“This is the strongest small business employment report we have had in a long time,” says Susan Woodward, the economist who worked with Intuit to create the Index. “Yet at the same time, the hiring rate has remained flat at just above five percent since May 2009. This indicates that small firm employees are staying with their current employers, rather than leaving for bigger firms. In normal times, the turnover at small firms, which typically pay less than their larger counterparts, is high. Currently, the turnover rate is still low compared to normal."
The March 2012 Index, which covered the period between February 24 and March 23, also shows overall employment growth in all census divisions for March, while a state breakdown shows slight decreases in just three states.
“The decreases in the employment growth rates for Oregon, Pennsylvania, and Illinois are so statistically close to zero they are not cause for concern,” says Woodward. “In contrast, things are beginning to look encouraging for New York, which is showing a positive change in small business employment growth after several months of decreases. The state may be doing better because a meltdown in Europe now looks less likely.”
Intuit plans to recalibrate its Employment Index in the coming months and expects future numbers to be lower due to these changes. This is a common statistical practice and the recalibration will be based on new data provided by the Bureau of Labor Statistics, which are used as inputs into the Index.
For details about how the numbers were obtained and more fast facts about March's Index results, check out index.intuit.com.
Tammy Lam is a business writer for Intuit and is passionate about solving small business problems.