April 2014

Small-business employment growth signals recovery

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Small-business growth, compensation and hours worked increased in October, according to www.thestreet.com. However, economists are uncertain whether this will soon lead to a full job market recovery.

Small-business employment rose 0.2 percent in October, which means about 44,000 new jobs were created in the U.S. The annual growth rate was 2.7 percent.

"The annual growth for employment will not drive us back to full employment soon, but it is encouraging," says Susan Woodward, economist and founder of Sand Hill Econometrics, Palo Alto, Calif. "A double-dip recession is looking less likely."

Average employment growth per firm was zero for October, according to the National Federation of Independent Businesses (NFIB). Employment change has been negative for all but two quarters since April 2007, so reaching the zero level means small businesses aren't reducing headcount and have added to private sector job growth for the first time in more than a year.

NFIB's index of small-business owner optimism jumped 2.7 points, reaching its second highest level in two years. Although business sentiment has been moving in a positive direction, it still is at a recession-level reading.


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