Title: Small Businesses Drive Job Growth in July: A Beginner’s Guide
Introduction:
In July, small businesses emerged as the primary catalyst behind the nation’s job gains, accounting for a significant portion of the 324,000 jobs added to the economy. Nela Richardson, Chief Economist for ADP, highlights the pivotal role played by small businesses in this positive development.
Small Businesses Lead the Way:
Small businesses made a remarkable contribution by adding 237,000 new jobs to the economy. Job gains in businesses with 1-19 employees amounted to 114,000, while businesses with 20-49 employees witnessed a growth of 123,000 jobs. Richardson emphasizes that these smaller enterprises have been dominating the hiring landscape for the past few months, accounting for two-thirds of the net new hiring among companies with fewer than 50 employees.
Medium-Sized Businesses:
While small businesses took the lead, smaller medium-sized businesses (50 to 249 employees) also saw a surge in job gains, with 152,000 new positions created. However, larger medium-sized businesses (250 to 499 employees) experienced a loss of 14,000 jobs. Large firms, defined as those with more than 500 employees, faced a decline of 67,000 jobs.
The Shift in Job Gains Explained:
Richardson suggests that the hiring data does not measure worker preferences, but certain trends become evident. It seems that post-pandemic workers might be reluctant to return to workplaces with large employee numbers. However, the data supports the dominance of consumer-facing industries, with small businesses at the forefront. The service sector witnessed the bulk of job gains, particularly in leisure and hospitality, which accounted for a substantial increase of 201,000 jobs. On the other hand, goods-producing companies only saw a modest growth of 21,000 jobs.
The Impact of Manufacturing:
Richardson raises an important question regarding the strength of the economy and a potential soft landing. As a reliable indicator, manufacturing’s decline for the fifth consecutive month warrants attention. Manufacturing, being an interest rate-sensitive industry with capital spending considerations, can influence the overall health of the economy.
Key Highlights from the July 2023 Report:
Private employers added a total of 324,000 jobs during the period, with leisure and hospitality leading the growth. However, manufacturing faced ongoing weaknesses, shedding jobs continuously for the fifth month in a row. The industry’s sensitivity to interest rates plays a significant role in these outcomes.
Breakdown of Service Providing Jobs:
Within the service sector, job gains amounted to 303,000. Various industries experienced specific growth figures: trade/transportation/utilities (30,000), information (36,000), financial activities (-5,000), professional/business services (5,000), education/health services (12,000), leisure/hospitality (201,000), and other services (24,000).
Pay Growth Trends:
Pay growth witnessed a downward trend in July, with job stayers experiencing a year-over-year increase of 6.2%, the slowest pace since November 2021. Meanwhile, job changers encountered pay growth slowing down to 10.2%.
Breakdown of Annual Pay Change by Industry Sector:
Goods-producing industries witnessed the following median change in annual pay percentages: natural resources/mining (6.2%), construction (6.4%), and manufacturing (5.7%). In contrast, service-providing industries experienced the following changes: trade/transportation/utilities (6.0%), information (5.5%), financial activities (6.4%), professional/business services (6.0%), education/health services (6.7%), leisure/hospitality (7.2%), and other services (6.1%).
Conclusion:
As the economy shows signs of recovery, small businesses have proven to be the driving force behind job gains. With their substantial contributions and dominance in the hiring landscape, small enterprises play a vital role in shaping the nation’s economic trajectory. While challenges persist in sectors such as manufacturing, the overall labor market remains resilient, supporting household spending and underscoring a positive outlook for the future.
Title: Small Businesses Drive Job Growth in July: A Beginner’s Guide
Introduction:
In July, small businesses emerged as the primary catalyst behind the nation’s job gains, accounting for a significant portion of the 324,000 jobs added to the economy. Nela Richardson, Chief Economist for ADP, highlights the pivotal role played by small businesses in this positive development.
Small Businesses Lead the Way:
Small businesses made a remarkable contribution by adding 237,000 new jobs to the economy. Job gains in businesses with 1-19 employees amounted to 114,000, while businesses with 20-49 employees witnessed a growth of 123,000 jobs. Richardson emphasizes that these smaller enterprises have been dominating the hiring landscape for the past few months, accounting for two-thirds of the net new hiring among companies with fewer than 50 employees.
Medium-Sized Businesses:
While small businesses took the lead, smaller medium-sized businesses (50 to 249 employees) also saw a surge in job gains, with 152,000 new positions created. However, larger medium-sized businesses (250 to 499 employees) experienced a loss of 14,000 jobs. Large firms, defined as those with more than 500 employees, faced a decline of 67,000 jobs.
The Shift in Job Gains Explained:
Richardson suggests that the hiring data does not measure worker preferences, but certain trends become evident. It seems that post-pandemic workers might be reluctant to return to workplaces with large employee numbers. However, the data supports the dominance of consumer-facing industries, with small businesses at the forefront. The service sector witnessed the bulk of job gains, particularly in leisure and hospitality, which accounted for a substantial increase of 201,000 jobs. On the other hand, goods-producing companies only saw a modest growth of 21,000 jobs.
The Impact of Manufacturing:
Richardson raises an important question regarding the strength of the economy and a potential soft landing. As a reliable indicator, manufacturing’s decline for the fifth consecutive month warrants attention. Manufacturing, being an interest rate-sensitive industry with capital spending considerations, can influence the overall health of the economy.
Key Highlights from the July 2023 Report:
Private employers added a total of 324,000 jobs during the period, with leisure and hospitality leading the growth. However, manufacturing faced ongoing weaknesses, shedding jobs continuously for the fifth month in a row. The industry’s sensitivity to interest rates plays a significant role in these outcomes.
Breakdown of Service Providing Jobs:
Within the service sector, job gains amounted to 303,000. Various industries experienced specific growth figures: trade/transportation/utilities (30,000), information (36,000), financial activities (-5,000), professional/business services (5,000), education/health services (12,000), leisure/hospitality (201,000), and other services (24,000).
Pay Growth Trends:
Pay growth witnessed a downward trend in July, with job stayers experiencing a year-over-year increase of 6.2%, the slowest pace since November 2021. Meanwhile, job changers encountered pay growth slowing down to 10.2%.
Breakdown of Annual Pay Change by Industry Sector:
Goods-producing industries witnessed the following median change in annual pay percentages: natural resources/mining (6.2%), construction (6.4%), and manufacturing (5.7%). In contrast, service-providing industries experienced the following changes: trade/transportation/utilities (6.0%), information (5.5%), financial activities (6.4%), professional/business services (6.0%), education/health services (6.7%), leisure/hospitality (7.2%), and other services (6.1%).
Conclusion:
As the economy shows signs of recovery, small businesses have proven to be the driving force behind job gains. With their substantial contributions and dominance in the hiring landscape, small enterprises play a vital role in shaping the nation’s economic trajectory. While challenges persist in sectors such as manufacturing, the overall labor market remains resilient, supporting household spending and underscoring a positive outlook for the future.
