Slow Economic Growth Predicts Weak Second Half

Date: August 05, 2015

Despite marginal job growth for the month, small business' overall economic outlook fails to impress.

U.S. small businesses added 25,000 new jobs in the month of June, resulting in employment growth of 0.13 percent, according to recently released Intuit data.

“A sign of stronger small business activity is the hiring rate, which has been rising slowly but steadily since September 2009,” the report says. However, June saw a slight decrease in the hiring rate compared to previous months.

Oregon was among the states with the largest gains in small business hiring, but the gain was focused in metro areas as rural areas are still struggling with job growth, says Oregon NFIB State Director Jan Meekcoms. “When blended, Oregon has an unemployment rate less than the national average for the first time in decades, but that does not accurately paint the small business picture from our members’ perspective who are located throughout the state—many in rural Oregon,” she says.

Oregon’s small businesses took a recent hit from legislation passed in June that, among other things, requires businesses with more than 10 employees to provide paid sick leave. That further impinges on future job growth in a state that already occupies an economic outlook rank of 45 on the Alec-Laffer State Economic Competitiveness Index. “When you add more layers of employment costs such as paid sick leave and the retirement plan and other burdens, companies that can will automate,” says Meekcoms.

Oregon isn’t the only state with a rough outlook. Despite small hiring gains in most states, the NFIB Small Business Optimism Index dropped 4.2 points in June, which ended the five months of positive growth it had previously seen. Some of the most significant areas that experienced a drop were: plans to increase inventory (-4%), expectations the economy will improve (-9%) and earnings trends (-17%).

“June terminated a promising string of improvements in owner optimism during the first months of the year. While it is not a disaster or a signal of a looming recession, it is a disappointing sign that economic growth on Main Street is not set for a strong second half of growth,” says NFIB Chief Economist Bill Dunkelberg in the June report. “The weakness was substantial across the board, showing no signs of a growth spurt in the near future.”

Related Content: Small Business News | Oregon | Paid Leave

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