San Francisco, CA (PRWEB) November 27, 2012
The payroll services provider ADP has released its ADP Small Business Report which showed that payrolls among small businesses (those with less than 50 employees) rose by a seasonally adjusted 50,000 in October. This increase is the largest since July, and accounts for 32 percent of the gains in employment across all businesses.
The report shows the roughly 1/3 of the employment gains came from the smallest companies, those with 1 to 19 employees, while the remaining 2/3 came from larger small businesses with 20 to 49 employees. This level of hiring by small business shows some confidence in the future of the U.S. economy - or perhaps a gearing up for the holiday season - yet it is still unclear how uncertainties such as the looming fiscal cliff will effect small business growth over the coming year.
At this point, economic uncertainty hasn’t yet translated into employment figures. That may be because of the “draconian cuts” that occurred during the most recent recession, according to Mark Zandi, chief economist of Moody’s Analytics, which collaborated on the ADP report.
While the uncertainty hasn’t shown up in employment figures, it is certainly showing in business investment. A recent Federal Reserve report shows business lending to be flat in the third quarter of 2012.
Further uncertainty has surfaced in the levels of new business formation, which is very low by historical standards. This decline in the formation of new small business concerns could have long term implications for the economy.
One area where small businesses may get a lift in terms of job growth going forward is construction. Of companies that employ 20 or fewer employees, roughly one fifth are related to construction, housing and commercial real estate in one form or another, Zandi says. "If the construction cycle turns, that should be a big boost to small business."
With commercial real estate already seeing a slight upturn and thanks to the unfortunate devastating damage done by Hurricane Sandy, it is possible that construction will see a boom in the coming months. Reconstruction efforts could boost the fortunes of construction, roofing, hardware stores, and similar small businesses.
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