Small Business Hiring Remains Steady in February

The CBIZ Small Business Employment Index reported a minimal decrease in hiring as labor shortages continue

The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted decrease of 0.19% in February. With small business owners continuing to face labor shortages, retaining talent remains a top priority. The CBIZ SBEI tracks payroll and hiring trends for over 3,300 companies that have 300 or fewer employees, providing broad insight into small business trends.

“Overall, small business hiring held steady in February as employers continue to grapple with labor shortages,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “Balancing healthy margins while also keeping employees fulfilled will be a challenge for many businesses going forward, as rising inflation leads consumers to become more cost-conscious.”

Similarly, the ADP employment report showed a small decrease of 61,000 small business jobs on a seasonally adjusted basis despite an overall increase in hiring. The February ADP data closely mirrored the results of the previous month. The ADP report counts small businesses as companies with 49 or fewer employees, while the CBIZ SBEI uses data from companies with 300 employees or fewer.

From a regional perspective, the CBIZ SBEI data reported an increase in hiring in the Southeast (0.74%) and West (0.56%) regions. The Central (-0.67%) shed the most jobs in February, closely followed by the Northeast (-0.35%).

On an industry level, the most notable job gains were seen in Insurance and Mining. Agriculture, Fishing and Hunting, and Wholesale Distribution all experienced declines in hiring.

Rathbun added: “The data suggests hiring is continuing to be approached with caution as small businesses face a tighter talent market and more frugal consumers leading into the warmer months.”

To view an infographic with data from the employment index, visit the CBIZ website.

Additional takeaways from the February SBEI include:

February’s snapshot: 21% of companies in the index increased staffing, 59% made no change to their headcounts and 20% reduced employment totals.

Industries at a glance: Insurance and Mining experienced hiring gains, while decreases were seen in Agriculture, Fishing and Hunting, and Wholesale Distribution.

Geographical hiring: The Southeast (0.74%) and West (0.56%) experienced an increase in hiring, while the Central (-0.67%) and Northeast (-0.35%) regions saw hiring declines.

What’s next? With “stickiness” in inflation becoming more evident, and in-turn consumers becoming more frugal, balancing a healthy margin while keeping employees fulfilled may be a challenge for small businesses moving forward.

The February CBIZ SBEI data follows the Q1 2023 release of the CBIZ Main Street Index, which surveyed over 700 businesses throughout the U.S. as they navigate the challenging economic environment.* The data reveals that a recession is the top concern for 61% of businesses. Despite their fears, businesses remain optimistic, as 81% of small to mid-sized businesses project revenue will remain the same or increase by as much as 10% over the next few months. Please see the CBIZ Main Street Index webpage for an interactive infographic with additional data.

*Note: Not all of those surveyed in the CBIZ Main Street Index are clients of CBIZ.

Editor’s note:

(1) The SBEI illustration is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License. Based on our work at https://www.cbiz.com.

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About CBIZ

CBIZ is a leading provider of financial, insurance and advisory services to businesses throughout the United States. Financial services include accounting, tax, government health care consulting, transaction advisory, risk advisory, and valuation services. Insurance services include employee benefits consulting, retirement plan consulting, property and casualty insurance, payroll, and human capital consulting. With more than 120 offices in 32 states, CBIZ is one of the largest accounting and insurance brokerage providers in the U.S. For more information, visit https://www.cbiz.com.

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