Hiring continued to rise through last month and small businesses are leading the way, adding the most employees across the United States.
Both the U.S Bureau of Labor Statistics and payroll processer ADP released data showing substantial increases in U.S. jobs in September. The Bureau of Labor Statistics put the total at 248,000 new jobs and ADP reported 213,000 new jobs. For both organizations, that number is an increase over the new jobs added in August, and highlights a hiring trend that has seen U.S. businesses continue to add new jobs consistently throughout 2014, after a drop in hiring in January.
In New England, ADP reported 10,000 new jobs in September. Massachusetts added 5,530 jobs.
“Economists are encouraged by the trend and its continuation of a longer hiring pattern,” said Mark Zandi, chief economist of Moody’s Analytics. “Job gains remain strong and steady. The pace of job growth has been remarkably similar for the past several years. Especially encouraging most recently is the increasingly broad-based nature of those gains. Nearly all industries and companies of all sizes are adding consistently to payrolls.”
The ADP National Employment Report also highlights the surge in hiring for U.S. small businesses as companies with fewer than 50 employees out-hired all others by adding 88,000 jobs in September, and 48,000 of those jobs were created by businesses with less than 20 employees, which equaled the total number of jobs added by medium-sized businesses. Only large businesses with more than 1,000 employees came close to matching the performances of this country’s small businesses, hiring a total of 77,000.
Brendan King, CEO of the Boston-based staffing firm King & Bishop, and a pundit on hiring trends and data, is particularly enthused by the hiring growth in small businesses. He suggested overall this is a good sign for the economy, because when small businesses hire, they typically go through a much more rigorous decision-making process to do so and are not going to rush to hire someone without considering all the factors impacting the bottom line.
“When you are a company and you have 1 to 50 people, hiring is a big investment, if you are a big company hiring is diluted,” King said. “These small businesses, if they are going to hire someone, it has to be done with thought and a lot of intent.”
King called small business “the backbone of the U.S. economy” and “the unsung hero” for that reason. He believes tracing the hiring from small businesses can really highlight whether the economy is improving or not.
Last month, the manufacturing sector made a big jump in hiring, adding 35,000 jobs — more than double the amount of jobs added in August. Retailers, shipping companies and utilities added 38,000 in September and financial services gained 5,000.
While healthy car sales can be credited for much of the gains in manufacturing, King pointed out that the manufacturing industry can provide perhaps one of the biggest boosts to adding new jobs and lowering unemployment, with a reported 600,000 manufacturing jobs unfilled in the United States this year alone.
Considering many manufacturing companies are small, specialized businesses, there is still untapped growth from more U.S. small businesses, according to King.
“It is not like there is a huge boom, but they are definitely wanting for qualified jobs,” King said.
At the end of the day, King is encouraged by any hiring that is putting workers in industries where they are experienced.
“We are talking about people being in the right job because of the skill they have, and that is the hiring that really matters,” he said.
Robert Nelson, director of the U.S. Small Business Administration’s Massachusetts District Office, which provides support and development to small businesses, said he is also excited to see U.S. small businesses leading the way in the new hiring data.
But he is not surprised.
“The stats show that two-thirds of new jobs have been created by small businesses and in this recovery it is absolutely the small businesses that continue to be drivers,” Nelson said.
Nelson added that the SBA is passionate about helping small businesses grow jobs and in turn help grow the economy. “If we can help businesses grow revenue and they need to hire more that is what we are all about,” he said.
Nelson is also quick to mention the performance of the manufacturing sector in recent job growth and also laments the lack of qualified employees to fill the demand for jobs in the industry.
According to Nelson, this is a critical issue that must be resolved for the economy to truly hit its potential. But he is not sure how it will be dealt with.
“Trade schools and colleges are not going to be able to keep up with demand from manufacturing,” Nelson said.
While experts are thrilled about the rise in small business hiring, the fact that hiring continues to top 200,000 a month is important because that is the number of new jobs that is generally required to lower the unemployment rate.
In line with that, the Bureau of Labor Statistics reported that the unemployment rate declined in September to 5.9 percent. Among the major worker groups, unemployment rates declined in September for adult men (5.3 percent), whites (5.1 percent) and Hispanics (6.9 percent). The rates for adult women (5.5 percent), teenagers (20.0 percent) and blacks (11.0 percent) showed little change over the month.
“September’s jobs-added number marks the sixth straight month of employment gains above 200,000,” said Carlos Rodriguez, president and chief executive officer of ADP. “It’s a positive sign for the economy to see the 200,000-plus trend continue.”