A trio of reports suggested the economy is still faltering—and small businesses are suffering.
Although ADP's monthly National Employment Report released last week shows that private U.S. employers added some 201,000 jobs—a figure higher than expected—in August, the the figures released the next day by the Bureau of Labor Statistics are more bleak: 96,000 jobs added to the U.S. economy in August, a “worse than expected showing,” according to Peter Cappelli, a professor of management at the University of Pennsylvania’s Wharton School of Business.
Job Drop-OutsThe slightly lower jobless rate—it dropped from 8.3 percent in July to 8.1 percent in August—is not the positive sign it might seem.
“The unemployment rate fell because more job seekers have given up and withdrawn from the labor market,” Cappelli told the Knowledge@Wharton blog. The labor force participation rate fell in August to 63.5 percent from 63.7 percent in July.
The good news: Public sector job losses have slowed, and August employment rose in food services and drinking places, professional and technical services, and health care.
The ADP report shows "a gradual strengthening in monthly gains in employment following a lull back in the spring," Joel Prakken, chairman of Macroeconomic Advisers, which prepares the report, told the Orange County Register.
Is It Enough?ADP increased its estimated jobs gain for July by 10,000 to 173,000 jobs. The U.S. needs about 125,000 new jobs a month to keep up with population growth and new people entering the workforce.
Prakken added: "But even increases of 200,000 a month is really not adequate to put unemployment on a sustainable downward path, especially if there is a recovery in the labor participation rate."
Meanwhile, the Intuit Small Business Revenue Index reported that small businesses with fewer than 20 employees created 30,000 new jobs in August—but saw revenue declines. Intuit’s data is based on some 83,500 small business customers who use the company’s online payroll software.
Revenue DeclinesSmall-business revenue is just now reaching pre-recession (pre-2007) levels, though this month it fell by 0.6 percent from the previous month.
The biggest declines: The retail industry and the accommodation and food services sector, which both saw declines of 1.1 percent. (Small business retail has taken a sizeable hit this year: It’s declined 6.1 percent since January.)
Real-estate services dipped by 0.7 percent. The health care and social assistance sector suffered the smallest hit of all the industries, shrinking just 0.4 percent (though that’s still 10 times more than the 0.04 percent it fell the previous month.)
Average monthly compensation grew by just $2 (0.08 percent), down from last month’s $7. Average monthly hours worked fell by 0.6 percent, or 42 minutes.
“This month’s indexes indicate that small businesses are hurting,” says Susan Woodward, the economist who worked with Intuit to create the indexes. “The employment rate has been slowing since April, and revenues have been falling since March, declining 2.7 percent from its most recent peak.”
She added: “At an annual rate, this is a decline of just over 6 percent, which is substantial.”