Business owners pulling back on hiring
By Christopher Gerber, Associate Digital Editor
December 6, 2012
Filed under Chris Gerber
Despite adding more than 118,000 jobs in the private sector in November, U.S. small business owners polled by Wells Fargo and Gallup have said on average that they do not intend to hire during the next twelve months, plunging the Wells Fargo/Gallup Small Business Index Survey to levels seen four years ago.
According to the poll, business owners are intending to pull back in 2013 and limit their hiring, while a full 1/5th said they intend to decrease the size of their workforce over the next 12 months, the highest rate ever recorded by the poll, which began back in 2003.
Only 17 percent of the small businesses polled said that they intend to increase their workforce, down from 20 percent in July, and matching the expected hiring rate among small businesses from the report one year ago.
Gallup warns that the last time hiring intentions were this low, dating back to late 2008, businesses followed up with massive layoffs during the first half of the next year. A high rate of layoffs by small businesses, coupled with potential austerity measures in the U.S. (otherwise known as the "fiscal cliff"), mandated spending cuts and expiring Bush-era tax cuts, means the economy could be in for serious trouble in the next quarter.
However, intentions have been different than the results, luckily, and the ADP employment report released on Wednesday reported U.S. private sector small businesses adding more than 19,000 jobs during the month, seasonally adjusted. Business larger than 50 employees added more than 99,000 jobs.
Despite adding many, these numbers were lower than projected, due to the damage done to homes and businesses along the East Coast by Superstorm Sandy.
"Superstorm Sandy wreaked havoc on the job market in November, slicing an estimated 86,000 jobs from payrolls. The manufacturing, retailing, leisure and hospitality, and temporary help industries were hit particularly hard by the storm," Mark Zandi, chief economist for Moody's Analytics, said in the report. "Abstracting from the storm, the job market turned in a good performance during the month."
But even with the bad news, the economy has continued to show good indicators. Housing construction is continuing to grow alongside improved consumer confidence. Business and consumers seem to have conflicting views about the future for the American economy. Hopefully the consumers are right.