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US Index | Canada Index | UK Index | About the Index | Methodology

US Index | Small Business Employment

-20,600 jobs | -0.16%

In the US in May, small businesses with one to nine employees saw monthly employment decrease by -0.16% to 12,863,300 jobs.* This means small businesses now employ 20,600 fewer people nationally compared to the previous month. This is a smaller decrease than in April when the Index reported a drop of -0.41% and in March when the Index reported a drop of -0.31%. 

Small business employment dropped in every sector. Sectors with the largest decreases were:

• Information (NAICS 51) — such as radio networks, newspapers, and book publishers — with a drop of -0.95% to 289,500 jobs
• Transport and warehousing (NAICS 48-49) — such as taxi services, school bus companies, and storage companies — with a drop of -0.89% to 52,200 jobs
• Finance and real estate (NAICS 52-53) — such as credit unions and property management companies — with a drop of -0.66% to 834,900 jobs

Sectors with the smallest decreases in small business employment were:

• Agriculture, natural resources, and mining (NAICS 11; 21) — such as orchards, farms, and drilling contractors — with a drop of -0.07% to 179,300 jobs
• Education and health services (NAICS 61-62) — such as exam preparation services, driving schools, and physician and dental practices — with a drop of -0.25% to 2,328,400 jobs
• Utilities (NAICS 22) — including power, irrigation, and air conditioning supply — with a drop of -0.27% to 646,900 jobs

Small business employment also dropped in every region in May. The Far West (Alaska, California, Hawaii, Nevada, Oregon, Washington) had the largest decrease in small business employment, with a drop of -0.65% to 2,159,300 jobs. The Plains (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota) had the smallest decrease, with employment down by -0.14% to 873,800 jobs.

Ufuk Akcigit, the Arnold C. Harberger Professor of Economics at the University of Chicago, said: “The US inflation rate remained higher than target at 4.9% in April. To combat this price surge, the Federal Reserve has implemented a gradual increase in its policy rate over the course of nearly a year, moving it from near zero to slightly above 5%. Surprisingly, despite these measures, the unemployment rate remains at a record low, and mass layoffs have been successfully avoided thus far. These positive outcomes have created market expectations for another rate increase in June.

“Detecting a shift in small business employment can be challenging due to the inherent underrepresentation of small businesses in most data sources. Furthermore, official statistics, which provide comprehensive coverage of small businesses, often arrive with a significant delay of 7 to 9 months. Recognizing the need to fill this crucial gap, the Intuit QuickBooks Small Business Index has emerged as a valuable tool, offering timely and insightful information.

“Based on the most recent Index, small business employment has continued to decline, with a decrease of -0.16% in May. However, this decline represents an improvement compared to the previous month's decrease of -0.41%. The most significant drop was observed in the "Information" sector, with a decline of -0.95%. On the other hand, the "Agriculture, natural resources, and mining" sector saw a milder decline of -0.07%. When considering different regions, the Far West region has witnessed the most significant decline of -0.65%, contrasting with the Plains region, which experienced the lowest decline of only -0.14%.

“These regional and sectoral declines come as no surprise, considering the sensitivity of small businesses to an inflationary environment and stricter credit conditions. It is crucial to recognize the significance of small businesses when considering future economic dynamics. Tomorrow's economy will undoubtedly be shaped by today's small and young businesses. Therefore, it is critical to acknowledge and give due weight to the substantial shift occurring across small business employment. By closely monitoring small business performance and considering their unique challenges, policymakers can ensure a comprehensive and effective approach to sustaining a healthy economic landscape.”

Get all the details from the interactive Small Business Index dashboard.

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About the Index

The Intuit QuickBooks Small Business Index is a timely new measure of small business employment and hiring in the US, Canada, and the UK. The Index launched in March 2023 and is updated monthly. The Index uses purpose-built economic models to normalize anonymized QuickBooks data to reflect the general population of small businesses in each country; it is not a reflection of Intuit’s business. The Index was developed in collaboration with leading economist Professor Ufuk Akcigit and an international team of researchers and academics.

Methodology

The Intuit QuickBooks Small Business Index creates aggregated data outputs from a sample of anonymized QuickBooks Online Payroll customer records which are calibrated using statistical methods to create modeled results which better reflect the general population of small businesses in each country, as represented by published official statistics. Statistical adjustment ensures the Index truly reflects employment and job vacancy changes rather than trends in the QuickBooks customer base. 

Read more or download the full methodology here. 

Rounded values

Total and monthly changes in employment and job vacancies have been rounded to the nearest hundred. Monthly changes and growth rates are calculated before total employment or job vacancy values are rounded. Rates have been rounded to the nearest hundredth.

Seasonal adjustments

The Index’s data insights are seasonally adjusted to limit the effect of seasonal patterns in employment and hiring throughout the year, which lead to regular fluctuations in workforce growth and contraction.

Employment growth formula

Employment growth(t) = [Employment(t)-Employment(t-1)]/[0.5*Employment(t)+0.5*Employment(t-1)]

*Employment levels

The Index produces a monthly prediction of employment growth rates by country, region, and sector. In order to translate these growth rates into the number of jobs/vacancies gained or lost, the growth rates are multiplied by the prior month’s predicted employment levels, except during the months when official statistics are published. During those months, the latest official employment levels that have been reported are used in the calculation instead of the Index’s prior month’s predicted employment levels. As a result, the Index’s predicted total employment levels may at times differ from the predicted growth rates. Official statistics are published at different frequencies depending on the country ranging from monthly to quarterly.

Time series

The Index uses data going back to January 2015 in the US and Canada and to January 2018 in the UK. Published at the earliest opportunity every month, the Index shows the number of people employed by small businesses (in the US and Canada) or the number of job vacancies at small businesses (in the UK) in the previous month and how that number has changed since the month before. The Index helps to eliminate almost all of the time lags in official statistics by providing estimated projections of what those statistics will ultimately show when they are published.

Sample sizes

The total sample across all three countries is around 424,000 small businesses. The US sample is almost 333,000 small businesses. The Canadian sample is almost 66,000 small businesses. The UK sample is almost 25,000 small businesses. The minimum sample sizes for regions or sectors to be included in the Index are 1,000 small businesses in the US, 800 small businesses in Canada, and 200 small businesses in the UK. 

Target populations

In the US and UK, the Index targets the populations of small businesses with one to nine employees. In Canada, the target population is small businesses with one to 19 employees. The differences ensure the Index’s data insights are consistent with official statistics in each country, which are used for benchmarking during the calibration process. Timely data insights for these populations of small businesses are particularly valuable since most datasets fail to cover this portion of the economy well. Please note: Unlike in the US and Canada, the UK Index uses job vacancy data for calibration rather than employment data because official employment statistics are not currently available for small businesses on a monthly basis. 

External data sources

External data sources used alongside the samples of anonymized QuickBooks Online Payroll customer data include:

• U.S. Bureau of Labor Statistics Business Employment Dynamics (BED) and Job Openings and Labor Turnover Survey (JOLTS) 
• U.S. Bureau of Economic Analysis regions

Geographic regions

• USA data insights are divided into Bureau of Economic Analysis (BEA) regions

Industry sectors

• USA data insights are available by North American Industry Classification System (NAICS) sectors 

Disclaimer

This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by region, state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.

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