Recently released economic and employment surveys of small businesses differ on their data and what their survey results mean for small businesses in the first few months of 2021. The CBIZ Small Business Employment Index (SBEI) offered a bit more optimism, while the ADP National Employment Report and Small Business Report did not.
The CBIZ SBIE that tracks payroll and hiring trends of 3500 small businesses showed growth in December with a seasonally adjusted increase of 0.32%. This followed a November decline in the Index that prompted some to have the concern that a negative trend might be emerging as we enter 2021. Analysts now are keeping an eye on the success of the COVID-19 vaccine distribution and the positive bump it could bring to consumer sentiment going into 2021.
“The data indicates that small businesses weathered the third COVID-19 surge in December, and we expect positive trends to continue into early 2021, with vaccine optimism likely to bolster consumer sentiment through the early part of the year,” said Philip Noftsinger, Executive Vice President, CBIZ, Inc. “However, if general sentiment surrounding the pandemic outlook does not improve in Q2, continued economic recovery could taper.”
In comparison to the CBIZ Index, the ADP National Employment Report reflected less optimism as private-sector jobs dropped by 123,000 on a month-over-month, seasonally adjusted basis and the Small Business Employment Report revealed a 13,000 decrease for the same period. The differing results may be due in part as to how the surveys are conducted. The ADP reports survey small businesses that have 49 or fewer employees, while the CBIE Index surveys those having 300 employee or less.
Regionally, the SBIE index showed that the December gain was not uniform across the U.S. as hiring declined marginally in the Central U.S. (-0.15%) but was offset by gains in the Northeast (1.18%), Southeast (1%) and West (0.44%). For state’s re-opening before May 15th the Index was up by 0.97%, while those that opened afterwards saw only a .23% increase.
Hiring by small businesses varied by sector with Healthcare, Financial Services, Real Estate, Non-Profits and Retail Trade moving up, while Technology and Life Sciences, Transportation, and Accommodation and Food Services did not join in. The Accommodation and Food Services sector continued its strong negative trend as new COVID-19 restrictions took their toll.
Consumer sentiment is seen as critical for the economy to recover and much of it is now tied to the efficient and effective distribution of the vaccine.
“Based on the current vaccination rate in the U.S., we still have a long road ahead,” Noftsinger noted. “Yet, we are confident that small business trends will end 2021 with vast improvement over the past few quarters.”
Read about Small Businesses Hit Hard by COVID-19 with a Slow Economic Recovery Expected despite Stimulus
