Employment, Confidence Grows in Small Business Sector
Small businesses are expanding their staffs across the country, indicating more owners may be in need of working capital to handle larger payrolls.
According to payroll services firm ADP, employment in nonfarm private small businesses’ payrolls increased more than 100,000 on a seasonally adjusted basis during November. This accounted for nearly half of all employment gains across all payroll size groups.
“Private sector small business employment increased by 101,000 jobs from October to November according to the November ADP Small Business Report,” the company stated in a media release. “Due to the important contribution that small businesses make to economic growth, employment data that are specific to businesses with 49 or fewer employees is reported each month and broadly distributed to the public, free of charge.”
ADP also stated 48 percent of the employment growth experienced during November was associated with business that have between one and 19 employees.
This growth in employment could help explain the increase in optimism among most business owners.
Vast majority of business owners confident
Nearly 4 in 5 survey respondents said they believe the U.S. economy will improve or remain at the same level during 2015, according to BMO Harris Bank. Meanwhile, 93 percent of business owners believe their business will grow or remain the same size during the same time period.
“While there are some causes for concern, both internationally and domestically, business owners and executives continue to exude confidence in their ability to grow their business in today’s economic environment,” Dave Casper, executive vice president and head of commercial banking at BMO Harris Bank, said in a press release. “That continued confidence is vital to the business-led economic recovery that has taken place over the past five years.”
The results of this survey were more positive than the one conducted 12 months ago, with Michael Gregory, head of U.S. economics at BMO Capital Markets saying 2015 is being heralded as a big year for consumer spending.
“Spending is finding support from strong job growth, lower energy costs and an appreciating U.S. dollar,” he said. “In reaction to continued sturdy consumer spending, we look for more businesses to expand their production, lifting both capital expenditure and hiring. This job-led, domestic demand should propel economic growth 3 percent in 2015, the best result in a decade.”
In addition to working capital for larger staffs, this confidence could lead to other expansion efforts that may require funding, such as more inventory and new real estate.