October Hiring Experiences Second Straight Month of Declines

The CBIZ Small Business Employment Index revealed job losses in every region in the United States

The CBIZ Small Business Employment Index (“SBEI”) reported a seasonally adjusted decrease of 1.25% in October as small business hiring experienced a second straight month of declines, and losses in three of the last four months. The CBIZ SBEI tracks payroll and hiring trends for over 3,100 companies that have 300 or fewer employees, providing broad insight into small business trends.

“GDP growth in the third quarter of 2023 was a whopping 4.9% on an annualized basis, which makes the economy look robust from the top line perspective,” said Anna Rathbun, CFA, Chief Investment Officer, CBIZ Investment Advisory Services, LLC. “While consumption played a significant role in driving these gains, the declining savings rate indicates that consumers are dipping into their rainy day fund in order to consume.”

The Bureau of Labor Statistics’ employment report indicated hiring growth missed expectations. The October reading showed an overall increase of 150,000 private-sector jobs. Nonfarm payroll gains in the previous two months were collectively revised downward by 101,000, adding to the weakness of the report. Despite the weakness in the Establishment Survey, the national unemployment rate remains historically low at 3.9%. The report is inclusive of all non-farm private employers across businesses of all sizes. Meanwhile, the ADP employment report indicated hiring growth among small, medium and large-sized companies. Its October reading showed an overall increase of 113,000 private-sector jobs for the month. Small businesses accounted for an increase of 19,000 of those jobs on a seasonally adjusted, month-over-month basis. 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.

The CBIZ SBEI regional data showed a hiring decrease in all four regions in October. The Northeast (-1.64%) and Central (-1.32%) regions experienced the largest declines in hiring, followed by the Southeast (-0.84%) and West (-0.80%) regions.

From an industry perspective, gains in employment were seen in Education Services, Healthcare, and Insurance. Industry decreases were observed in Arts, Entertainment and Recreation, Rental and Leasing Services, and Technology and Life Sciences.

Rathbun added, “The observed patterns in job gains and losses underscore that essential industries demonstrate greater resilience compared to the more cyclical sectors of our economy. This closely aligns with anticipations of a decline in future discretionary spending.”

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

Additional takeaways from the October SBEI include:

October’s snapshot: 18% of companies in the index increased staffing, 58% made no change to their headcounts and 24% reduced employment totals.

Industries at-a-glance: Education Services, Healthcare, and Insurance experienced hiring gains. Decreases were seen in Arts, Entertainment and Recreation, Rental and Leasing Services, and Technology and Life Sciences.

Geographical hiring: The Northeast (-1.64%), Central (-1.32%), Southeast (-0.84%) and West (-0.80%) regions all experienced declines in hiring.

What’s next? Is this growth trajectory sustainable? Insights from this month's SBEI suggest that consumers are being more selective about where they spend their money. Particularly, sectors like entertainment, retail, and leisure activities are seeing shifts in spending patterns. It seems consumers are increasingly voting with their wallets in these discretionary areas.

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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