The job market is looking up and small businesses are reaping the benefits.
The CBIZ Small Business Employment Index, which tracks hiring at companies with 300 or fewer employees, reported a 1.66 percent increase in March, the highest month-over-month increase since June 2010.
"I think it's an extremely positive sign, economically," said Philip Noftsinger, business unit president for CBIZ Payroll Services. He said that while employment gains at larger firms could be attributed to increases in overseas business, small business job recovery is encouraging because it implies growing demand within the U.S. economy.
Noftsinger described a snowball effect in which increasing demand, hiring and consumer spending build on one another to propel the national economy forward. "What's really going to be important for a domestic recovery is those small businesses," he said. "What really will drive a positive movement in the economy is getting that small business employment back up and getting cash in the hands of consumers."
One big X factor that has the potential to put the brakes on this positive trend is the price of gas, Noftsinger said. Small companies with tight operating budgets and little access to the credit markets could be materially affected if fuel prices, currently at around $4 a gallon, continue their ascent.
While signs of a recovery in the labor market early last year turned out to be short-lived, Noftsinger said he's more optimistic that today's improving market has staying power. In the CBIZ index, a majority of companies are keeping staffing levels steady, while more than a quarter are adding jobs, often in sales positions.
This scramble to add salespeople is a strong signal that these companies expect the economy's upward trajectory to continue. "They're seeing some greening in the economy and they want to take advantage of that," Noftsinger said. Whereas the blip of improvement last year was driven primarily by confidence that turned out to be premature, the small businesses that are adding workers today are motivated by macro-economic conditions, not sentiment, he said.
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