NEW YORK, N.Y. – The pace of small business hiring is stalling and expected to slow over the next year.
Small companies created 93,000 new jobs last month, the same amount as in March, according to a report Wednesday by ADP. The payroll company’s small business customers have added an average 85,000 new jobs over the past eight months, down from nearly 106,000 the previous five months.
Meanwhile, a survey of owners, which was released Wednesday by Wells Fargo & Co., found that 23 per cent plan to hire over the next year, down from 26 per cent in a survey taken in January. The survey, which questioned 600 owners in April, also found that hiring has been virtually unchanged, with 18 per cent adding staffers, down from the previous survey’s 19 per cent. Wells Fargo’s Small Business Index, which measures owners’ optimism, fell to 64 from 67 in the first quarter.
Owners have been scaling back hiring since last summer as the economy showed signs of weakening. Their current hesitation about expanding payrolls and decreased optimism are likely linked to uncertainty about the presidential election. Half of the owners in the Wells Fargo survey said the outcome of the election will have a major impact on their business, and 23 per cent said it would have a minor impact.
Wells Fargo’s findings are in line with a survey released Tuesday by Bank of America Corp., which found optimism dropped from a survey last fall, and that owners are taking a wait-and-see approach because they don’t know who will be the next president.
Owners still have a positive view of their companies’ prospects, according to the Wells Fargo survey, which found that 67 per cent rate their business’ financial situation as good. That’s the same as in the previous survey. The number of owners who expect their companies’ financial situation to be better 12 months from now edged higher, to 72 per cent from 71 per cent. The number expecting stronger revenue also crept higher, to 51 per cent from 50 per cent.
Owners have been conservative about taking risks such as hiring and borrowing since the recession. Many have said in surveys that they won’t hire unless their revenue is strong enough to cover the added expense. In the Bank of America survey, 70 per cent of owners said their current staffs can handle their workload, so there’s no need for them to hire.