Methodology

Get the full methodology behind the Intuit QuickBooks Small Business Index, a collaboration between Intuit QuickBooks and an international team of economists led by Professor Ufuk Akcigit.

How it works

The Index uses purpose-built economic models to normalize anonymized QuickBooks data against official government statistics to reflect the general population of small businesses in the US, Canada, and the UK. It is not a reflection of Intuit’s business. This robust methodology expands Intuit’s ability to more clearly delineate between Intuit’s small business customers and the small business community at large, while also providing a powerful new tool that can inform policies that impact small businesses around the globe, as well as to help small businesses make key decisions.

The Index methodology is robust and stands out from other reports in the market by being calibrated against official statistics and focusing exclusively on small businesses, while also eliminating publication delays. Unlike other small business indexes, it does not rely exclusively on survey data. Instead, a sample of anonymized QuickBooks Online Payroll customer records are aggregated and normalized against official government statistics before publication using purpose-built economic models.

Find out more about the data insights, samples, and calculations below.

Data insights

USA

For small businesses with 1-9 employees:

• Monthly employment growth rates (percentage change in the number of people employed by these businesses since the previous month)
• Monthly employment levels (total number of people employed by these businesses)

Canada

For small businesses with 1-19 employees:

• Monthly employment growth rates (percentage change in the number of people employed by these businesses since the previous month)
• Monthly employment levels (total number of people employed by these businesses)

UK

For small businesses with 1-9 employees:

• Monthly job vacancy growth rates (percentage change in the number of vacancies at these businesses since the previous month)
• Monthly job vacancy levels (total number of vacancies at these businesses)

Geographic regions

USA

For the US, data insights are aggregated into eight Bureau of Economic Analysis (BEA) regions:

• Far West (Alaska, California, Hawaii, Nevada, Oregon, Washington)
• Great Lakes (Illinois, Indiana, Michigan, Ohio, Wisconsin)
• Mideast (Delaware, District of Columbia, Maryland, New Jersey, New York, Pennsylvania)
• New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont)
• Plains (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota)
• Rocky Mountain (Colorado, Idaho, Montana, Utah, Wyoming)
• Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia) 
• Southwest (Arizona, New Mexico, Oklahoma, Texas)

In addition, aggregated data insights are available for the following 10 states:

• Arizona
• California
• Colorado
• Florida
• Georgia
• Illinois
• Indiana
• Michigan
• Minnesota
• Missouri
• New York
• North Carolina
• Ohio
• Oregon
• Pennsylvania
• Tennessee
• Texas
• Virginia
• Washington
• Wisconsin

Canada

For Canada, data insights are currently available for the following Statistics Canada regions and provinces:

• Atlantic Region (Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick)
• British Columbia
• Ontario
• Prairie Provinces (Manitoba, Saskatchewan, Alberta)
• Quebec

Note: The Northern Territories region (Nunavut, Northwest Territories, Yukon Territory) is not currently included in the Index.

UK

For the UK, data insights are currently available at the country level:

• England
• Northern Ireland
• Scotland
• Wales

In addition to the four nations, data insights are available in all nine regions of England:

• North East
• South East
• East of England
• London
• West Midlands
• East Midlands
• South West
• North West
• Yorkshire and the Humber

Industry sectors

USA 

In the US, data insights are available for the following 12 sectors and groups of sectors, as defined by the North American Industry Classification System (NAICS):

• Agriculture, natural resources and mining (NAICS 11; 21)

• Construction (NAICS 23)
• Education and health services (NAICS 61-62)
• Finance and real estate (NAICS 52-53)
• Information (NAICS 51)
• Leisure and hospitality (NAICS 71-72)
• Manufacturing (NAICS 31-33)
• Professional and business services (NAICS 54-56)
• Retail trade (NAICS 44-45)
• Transport and warehousing (NAICS 48-49)
• Utilities (NAICS 22)
• Wholesale trade (NAICS 41-42)

Note: NAICS sectors 81 (other services, except public administration) and 92 (public administration) are not currently included in the Index.

Canada

In Canada data insights are available for the following 13 sectors and groups of sectors, as defined by the North American Industry Classification System (NAICS):

• Accommodation and food services (NAICS 72)
• Agriculture, natural resources and mining (NAICS 11; 21)

• Business services (NAICS 55-56)
• Construction (NAICS 23)
• Education (NAICS 61)
• Finance and real estate (NAICS 52-53)
• Health care and social assistance (NAICS 62)
• Information; arts and recreation (NAICS 51; 71)
• Manufacturing (NAICS 31-33)
• Professional services (NAICS 54)
• Transport and warehousing (NAICS 48-49)
• Utilities (NAICS 22)
• Wholesale and retail trade (NAICS 41-42; 44-45)

Note: NAICS sectors 81 (other services, except public administration) and 92 (public administration) are not currently included in the Index.

UK

In the UK, data insights are available for the following 13 sectors (also known as “sections”) and groups of sectors, as defined by the UK Standard Industrial Classification of Economic Activities (SIC): 

• Accommodation and food services (SIC I)
• Administrative and support services (SIC N)
• Arts, entertainment, and recreation (SIC R)
• Construction (SIC F)
• Education (SIC P)
• Finance and insurance (SIC K)
• Health care and social work (SIC Q)
• Information and communication (SIC J)
• Manufacturing (SIC C)
• Professional services (SIC M)
• Real estate (SIC L)
• Transport and storage (SIC H)
• Wholesale and retail trades (SIC G)

Note: UK SIC sections A (agriculture, forestry, fishing), B (Mining and quarrying), D (Utilities), E (Water and waste management), O (public administration, defence, social security), S (other services), T (household employers), and U (extraterritorial organisations) are not currently included in the Index.

Summary methodology

The Intuit QuickBooks Small Business Index creates aggregated data outputs from a sample of anonymized QuickBooks Online Payroll customer payroll 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. 

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.

Time series

The Index uses data going back to January 2015 in the US and Canada and January 2018 in the UK. Published at the earliest opportunity every month, it shows the number of people employed by small businesses (US and Canada) or the number of job vacancies at small businesses (UK) in the previous month and how that number has changed since the month before. In March, for example, the Index shows total employment or job vacancies in February and the monthly growth rate—up or down—compared to January.

The Index’s primary benefit is its unparalleled focus on small businesses, which are vital to the current and future health of the economy but often underrepresented in economic data. By shining a brighter light on small businesses, Intuit hopes to increase their growth and success rates throughout the US, Canada, and the UK. At the same time, it helps to eliminate almost all of the time lags in official statistics—for example, of up to nine months in the US—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 reflects the population of small businesses with one to nine employees, while in Canada it reflects small businesses with one to 19 employees. The differences in target populations ensure the data insights are consistent with official statistics available for benchmarking during the calibration process. Data insights for these target populations are particularly valuable since most datasets fail to cover this portion of the economy well. Please note: Unlike the US and Canada Indexes, the UK Index uses job vacancy data for calibration rather than employment data because official employment statistics are not currently available on a monthly basis for small businesses.

External data sources

External data sources used alongside anonymized QuickBooks 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
• Statistics Canada Labour Force Survey and regions
• UK Office of National Statistics Vacancy Survey

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.

Definitions 

Firms versus establishments: The administrative data for each anonymized QuickBooks Online Payroll account corresponds to the firm and may also correspond to business establishments (physical locations where business is conducted). However, because the Index is primarily focused on small businesses with 1-9 (in the US and UK) or 1-19 (in Canada) employees, the difference between establishments and firms is minimized. 

Firm size: The size of a firm is determined by the average of the number of employees across two consecutive months.

Employee count: Anonymized administrative data from a sample of QuickBooks Online Payroll customer accounts provides counts on the number of employees, furloughed employees, and paychecks issued in a given pay period. Employees include wage earners with no hours in the pay period, workers on unpaid leave, and furloughed workers. The Index focuses on active and working employees but excludes furloughed workers as well as bonus payments and adjustments.

Download full methodology

For citations: Akcigit, U., Chhina, R., Miranda, J., Ocakverdi, E., & Serrano-Velarde, N. (2023, May 1). Intuit QuickBooks Small Business Index: A New Employment Series for the US, Canada, and the UK. Retrieved from https://quickbooks.intuit.com/r/small-business-data/index/methodology/ 

Disclaimer

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