What Do December’s Hiring Numbers Mean for 2016?

Date: January 08, 2016

The second half of 2015 showed a decrease in job creation and a continuing struggle for small businesses to find talented workers.

When it comes to job numbers, 2015 ended with a fizzle.

Only 13 percent (a 2-point increase from November) of small businesses reported increasing employment an average of 2.3 workers per firm, while 12 percent (also up 2 points from November) reported reducing employment an average of 3.3 workers per firm, according to NFIB’s latest Jobs Report.

All of this resulted in another flat net job creation with the average employment gain per firm falling to -0.07 workers from 0.01 in November. 

STAY TUNED: The results of NFIB’s full Small Business Economic Trends survey will be released on Jan. 12.

“The size of the average reduction in employment swamped the average increase, producing a negative overall gain,” according to the report. 

Among owners’ pain points is a difficulty in finding qualified workers, which ranks third as owners’ most important business problem—behind only taxes and overregulation.  

“This is the highest reading since 2007,” the report says about finding qualified workers. “This suggests that employers will face continued wage and benefit cost pressure in order to attract and keep good employees.”

Conflicting Numbers

Small businesses (firms with fewer than 50 employees) created 95,000 jobs from November to December, according the ADP National Employment Report. But while the one-month growth for small businesses is notable, the news is tempered by lackluster reports from the months leading up to December.

Small businesses produced 72,000 jobs in November and 81,000 in October, lower than previously reported by a combined 18,000 new jobs.

Job growth tapered off throughout 2015 as well. The year kicked off with an average of 107,000 jobs created every month during the first half and dropped to an average of 75,500 jobs a month in the second half.

What’s to Come in 2016?

Small business owners may be slow to hire, said Martin Mucci, chief executive of Paychex, citing new overtime pay rules, the Affordable Care Act and the shortage of qualified workers as factors, in an interview with the Chicago Tribune.

Plus, economists aren’t expecting dramatic growth this year in part because small businesses such as restaurants and retailers depend on consumer spending, which hasn’t been consistent.

However, others remain optimistic.

Strong job growth shows no signs of abating,” Mark Zandi, chief economist of Moody’s Analytics, which prepares the report with ADP’s data, said. “The only industry shedding jobs is energy. If this pace of job growth is sustained, which seems likely, the economy will be back to full employment by mid-year.” 

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