Amid a slowdown in productivity and growing concerns over the direction of the economy, small businesses are putting a freeze on hiring. Here's a look at this week's economic developments and how they may impact your business.
Hiring Down, Salaries Up
Small businesses were hiring less and paying employees more in October, SurePayroll, a small-business payroll firm based in Chicago, reported on Wednesday.
An analysis of payroll data from more than 17,000 small businesses nationwide showed that the average size of businesses shrunk last month to 5.85 employees, a decrease of 0.07 percent from September, the report said.
Over the last 12 months, hiring at small businesses has dropped by 0.3 percent, the report said.
Of 258 small-business owners surveyed, just 11.4 percent said they had hired new employees in October, compared to 14.6 percent the previous month, the report said.
While 80.5 percent said they ended the month with same number of employees as September, 8.1 percent said they cut jobs, the report said.
Meanwhile, small-business salaries rose in October by 0.5 percent to an average of $31,083, the 14th straight month of salary increases, the report said.
Almost half of the owners surveyed said they are now paying more for employees than they did at the start of the year.
SurePayroll said the increases were being driven by pressure from larger companies that are raising salaries to retain talent amid a tighter labor market.
Similarly, the Monster employment index — a monthly gauge of the labor market based on all online job ads in the U.S. — was unchanged in October, as a rise in demand for professional, scientific, and technical services was offset by fewer jobs in the housing and construction market, the job-posting site reported on Thursday.
The index now stands at 172, up from 143 a year ago, Monster said.
Consumer Confidence Falls
Concerns about the labor market drove down consumer confidence in October, the Conference Board said on Tuesday.
The private research group's monthly consumer confidence index, based on a survey of 5,000 households nationwide, dropped to 105.4 from 105.9 in September, the group said.
"October's dip in confidence was prompted by consumers' mixed assessment of present-day conditions and a less favorable view of the job market," Lynn Franco, the group's consumer research director, said in a statement.
Homebuilding, Sales Drop
Construction spending dropped by 0.3 percent in September to $1.195 billion, the Commerce Department reported on Wednesday.
Spending on housing construction was down 1.1 percent from August, while non-residential project, such as offices and schools, rose by 0.5 percent, the report said.
Pending home sales were also down in September, by 1.1 percent, the National Association of Realtors reported on Wednesday.
For the year, pending home sales — based on contracts signed about a month or two before closing a sale — are down by 13.6 percent, the report said.
Productivity growth in the non-farm sector slowed to zero percent over the third quarter, the Labor Department reported Thursday.
The slowdown was blamed on lower output, the report said.
Over the past 12 months, productivity has grown by 1.3 percent, the slowest rate in nine years, the report said.
In October, growth in the manufacturing sector dropped to its slowest pace in over three years, the Institute of Supply Management reported Wednesday.
Jobless Claims Up
New claims for unemployment benefits surged by 18,000 to 327,000 in the week ending Oct. 28, the Labor Department reported on Thursday.
The biggest increases were recorded in Illinois, Ohio, and Pennsylvania, the report said.
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