The continual improvements observed across the economy in the last several months has likely led many small business owners to enjoy more revenues and potentially income, which in turn could lead to encouraging them to hire. That trend might now be reflected in the latest hiring figures.
While businesses of all sizes saw an increase in hiring for the month of July, it was once again smaller companies that led the way, according to the latest ADP National Employment Report from ADP and Moody's Analytics. In all, there were some 200,000 nonfarm private sector jobs added over the course of the month, a slight increase from June's upwardly revised 198,000, but well above the just 128,000 observed during the same period last year. Of that amount, 82,000 were from small businesses alone. Those enterprises with between one and 19 employees added some 51,000 jobs, while those with between 20 and 49 workers brought on the remaining 31,000.
Meanwhile, those categorized as medium-sized businesses with between 500 and 499 employees (which would still be categorized as being small by the federal government) brought on an additional 60,000 new workers, the report said. Finally, large businesses added 57,000 new jobs, with companies carrying more than 1,000 workers bringing aboard a combined 50,000, while those with between 500 and 999 employees expanded payrolls by just 7,000.
"The U.S. private sector added a total of 200,000 jobs during the month of July, with businesses of all sizes contributing to the overall gain and small businesses generating the greatest share, just as they did in the previous month," said Carlos A. Rodriguez, president and chief executive officer of ADP. "Among industries tracked by the ADP National Employment Report, professional/business services showed the largest increase in July with the addition of 49,000 jobs, while construction added 22,000 jobs, a stronger gain than in June."
Most industries involved in more hiring
In all, only one sector of the overall job market saw a drop in hiring during the month of July, the report said. While manufacturing saw a decline of about 5,000 jobs, professional or business services; trade, transportation, and utilities; construction; and financial activities all enjoyed improvement. Of those, the largest was for professional or business services, which added some 49,000 jobs overall. The trade, transportation and utilities industries weren't far behind at 45,000 new positions, and construction brought on 22,000 workers. Finally, companies in the financial activities field added 4,000 jobs.
"Job growth remains remarkably stable," said Mark Zandi, the chief economist for Moody's. "Businesses are adding to payrolls in most industries and across all company sizes. The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts. This bodes well for the next year when those headwinds are set to fade."
Small business owners may be feeling better about their prospects for expansion when it comes to bringing aboard new employees given the current situation and those expected to come in the near future. However, it's important to note that adding employees, while helpful to the growth of a company overall, could also significantly increase its small business insurance costs. As a consequence, owners will likely have to consider ways in which they can keep these premiums as low as possible while still bringing on more workers, and this might include shopping around for more affordable options when it comes to workers' compensation or general liability insurance. Finding the least-expensive policies that will still fit a growing company's needs is often of the utmost importance for smaller companies, which tend to operate with thinner margins to begin with.