Job growth in the United States seems to be accelerating again, with U.S. businesses adding an estimated 192,000 jobs in March, according to government figures. Yet, some recent reports suggest that small-business hiring hasn't picked up nearly as fast as large-business hiring.
The latest ADP Small Business Report showed that small businesses added 72,000 jobs in March, down from 76,000 in February and below most monthly jobs growth rates in 2013. (By comparison, small employers added 113,000 new jobs last November and 109,000 last September.)
What’s going on?
Mark Zandi, chief economist for Moody’s Analytics, says the problem is that many small businesses’ fortunes are tied to the housing market’s recovery, since the construction, landscaping and home-improvement industries are disproportionately comprised of small companies. The housing recovery has teetered in recent months with home sales slowing, and Capital Economics predicted that the price appreciation of U.S. homes will slow down considerably in 2014.
If home prices and sales stall, there will be less demand for new homes to be built, renovation projects, and likely a host of homeowner expenses that often end up in the pockets of small businesses.
“The key to small business job growth is the housing recovery,” Zandi said on a media call, according to The Washington Post. “The big guys are not as tied to housing, at least not to the same degree.”
If predictions about the housing market cooling in 2014 are correct, that could spell more trouble for all the small companies that rely on housing’s success for their growth and to hire more workers.
On the other hand, if housing picks up again, small-business jobs could see nice growth.
“When builders build, we see expansion in our business,” Select Signs, a small Dayton, Ohio-based company that makes various kinds of signs for residential and commercial builders, told U.S. News & World Report last year. “And this growth then spreads from us to our suppliers
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