NEW YORK – Investors are looking to Insperity Inc. and Intuit Inc. to see if small-business jobs are keeping pace with broader measures of U.S. labor demand.
Intuit, maker of financial and tax-preparation software, will release on July 30 its monthly small-business employment index, which measures hiring at companies with fewer than 20 workers. Insperity, which offers human-resource services such as payroll processing to small- and mid-sized enterprises, will report on Aug. 1 the average number of work-site employees paid per month by its customers.
These data offer an accurate handle on employment trends at small- and medium-sized businesses, said Walter Bucky Hellwig, who helps manage $17 billion in Birmingham, Ala., at BB&T Wealth Management. In conjunction with other indicators from the private sector, investors can use the numbers to identify changes in hiring more quickly than relying on government data alone, he said.
Its important to follow this industry because historically, thats where most of the job growth comes from, Hellwig said. Small businesses have a leading edge because they have more flexibility to add head count quickly when the economy improves, he said. Amid recent gains in total payrolls, any divergence from that would call for further investigation.
U.S. employers added 195,000 workers in June, the third consecutive month when gains exceeded the median estimate of economists surveyed by Bloomberg News. This capped 12 consecutive months above 100,000 – the longest such streak since the 33 months ended in May 2000. The Labor Department will announce July figures on Aug. 2.
Intuits small-business employment index rose to 95.1 in June, the highest since 2009, from 95 in May, according to data from the Mountain View, Calif., company.
These smallest employers are important to the economy as they comprise 87 percent of the total U.S. private-employer base and employ 19.4 million people, Intuit said in a description of its index.
Insperity forecasts that its customers average number of work-site employees paid per month will increase by as much as 2.2 percent to 127,000 in the second quarter from 124,219 a year ago. The Kingwood, Texas-based company processes payrolls for between 5,000 and 6,000 businesses with an average head count of slightly less than 20 people, so its report is good for gleaning broader conclusions about the pace of hiring, said Tobey Sommer, an analyst in Atlanta at SunTrust Robinson Humphrey Inc.
Insperity also will release its earnings and the results of its quarterly small-business confidence survey on Aug. 1. Owners were showing a willingness to hire more employees amidst signs of expanding business activity, the company said April 29 in releasing the previous survey.
Analysts and investors monitor both quantitative and qualitative measures of small-business labor demand, especially because there hasnt been a uniform trend across a variety of metrics, Sommer said. Were still muddling forward.
Hiring among these companies is a challenging number to effectively capture, so using a combination of data helps provide an overall sense of whats happening, said Timothy McHugh, an analyst in Chicago at William Blair & Co.
The National Federation of Independent Businesss optimism index decreased to 93.5 in June from 94.4 in May, a one-year high. This showed that sentiment remained in tepid territory, the group said in a July 9 statement.
CBIZ Inc. echoed this, as some small-business owners are still tepid about their growth prospects, Philip Noftsinger, president of CBIZ Payroll Services, said in a July 5 statement. The companys small-business employment index – a barometer for hiring trends at companies with 300 or fewer workers – fell by 0.21 percent in June from the previous month after a 1.91 percent increase in May, according to figures from the Cleveland company.
We still need to look at numbers like these to help build the fundamental case as to whether economic and employment growth are self-sustaining, Hellwig said.