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Intuit Small Business Employment Index Reflects Soft Labor Market
30,000 New Jobs Created in October; Decrease in Hours Worked, Compensation
MOUNTAIN VIEW, Calif. – Oct. 31, 2011 – Small businesses created 30,000 new jobs in October, but employees are working fewer hours and making less money.
These are among the results of this month's update of the Intuit Inc. (Nasdaq: INTU) Small Business Employment Index, covering the period between Sept. 24 and Oct. 23. The monthly report found that small business employment grew by 0.14 percent in October, equating to an annual growth rate of 1.7 percent. Hours worked and compensation both decreased by 0.2 percent and 0.06 percent respectively.
Since the hiring trend began in October 2009, small businesses have created 660,000 new jobs. The Index is based on figures from small businesses with fewer than 20 employees that use Intuit Online Payroll.
Based on these latest numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised downward the previously reported growth rate for September to 0.19 percent from 0.3 percent. This equates to 40,000 jobs added in September, down from a previously reported 65,000 jobs.
"While small business employment is up in October, it is not up by much," said Susan Woodward, the economist who worked with Intuit to create the Index. "The softness of the small business labor market is not much of a surprise. The breath-holding in Europe over the timing and shape of the Greek bond default was likely weighing on economic decisions at firms of all sizes here, too, and delaying at least some purchase decisions. With the new European deal, there is now hope that this concern will be lifted."
The Intuit Small Business Employment Index shows a 0.14 percent increase in employment for October. The Employment Index reflects data from approximately 70,000 small business employers who use Intuit Online Payroll. The month-to-month changes are seasonally adjusted and informative about the overall economy. The National Employment Index is from the Bureau of Labor Statistics.
Decrease in Hours Worked, Compensation
Small business hourly employees worked an average of 106.3 hours in October, making for a 24.5-hour workweek. This is a 0.2 percent decrease from the revised September figure of 106.6 hours.
Average monthly pay for all small business employees declined slightly to $2,622 in October. This is a 0.06 percent decrease compared to the September revised estimate of $2,623 per month. The equivalent annual wages would be about $31,500 per year, which is part-time work for many small business employees.
"The seasonally adjusted trend in hours worked and compensation has turned down," added Woodward. "This is a further sign of softness in the small business labor market. On the positive side, we do see an increase in the new hire rate and hourly wages for the approximately 65 percent of small business employees who are hourly."
Small Business Employee Monthly Hours Worked for hourly employees decreased by 0.2 percent in October 2011. The levels reflect data from approximately 180,000 hourly employees of the Intuit Online Payroll customer set of approximately 70,000 businesses and are not necessarily representative of all small businesses. However, the month-to-month changes reflect the results of federal employment data for small businesses during corresponding times, leading to the conclusion that they are informative about the overall economy.
Small Business Employee Monthly Compensation for all employees shows compensation decreased by 0.06 percent in October, 2011. This data includes the compensation paid by small business owners to themselves. The levels reflect data from approximately 290,000 employees of the Intuit Online Payroll customer set of approximately 70,000 businesses, and are not necessarily representative of all small business employees. The month-to-month changes are seasonally adjusted and informative about the overall economy.
Small Business Employment by Geography
The Intuit Index also breaks down employment by census divisions and states across the country and shows slight gains across most of the nation.
"Small business employment is up only slightly, but none of the divisions show a decrease in employment," said Ginny Lee, senior vice president and general manager of Intuit's Employee Management Solutions division. "Among the 15 states which we measure, employment is up for all but four. For these four, the decline is within noise levels in the data, so there does not appear to be any real concern."
Small Business Employment by U.S. Census Division continues to grow in all parts of the country except the East South Central division, which is flat. The data reflects employment from approximately 70,000 small business employers who use Intuit Online Payroll. The month-to-month changes are seasonally-adjusted and informative about the overall economy.
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About the Index
The Intuit Small Business Employment Index is based on aggregate and anonymous online employment data from approximately 70,000 small business employers, each with fewer than 20 employees. These small businesses use Intuit Online Payroll from Intuit, the No. 1 payroll provider with more than 1 million customers. These smallest employers are important to the economy as they comprise 87 percent of the total U.S. private employer base and employ nearly 20 million people. More information is available at: index.intuit.com.
Intuit reports data for three categories: small business employment, compensation and hours worked. Intuit analyzes and publishes the data at the beginning of each month. The Index also includes employment data broken down by geography. As with the government data, there may be revisions to the Intuit Index numbers. These revisions are partly due to calculations using the latest month of new Intuit data. These calculations include recomputing seasonal factors and the moving average process used to obtain the curve, which can change the values for previously reported months. Changes to the data are also due to revisions to the government employment data, which is used to calculate the Intuit Index.
While the Intuit Small Business Employment Index offers macroeconomic insight about the economy generally, it does not indicate or represent changes in Intuit's business results for any period.
The Index data reflects monthly employment activity in small businesses, and is adjusted to account for changes in Intuit's Online Payroll customer base. The percent change is measured monthly using the change in employment for existing Intuit Online Payroll customers from one month to the next. The set of customers changes each month so the measurement is the change, for each pair of months, for customers who are present in both the earlier and the later month.
Intuit Small Business Employment Index: index.intuit.com
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Intuit Payroll on Twitter: www.twitter.com/IntuitPayroll
Intuit Small Business Blog: www.blog.intuit.com
About Intuit Inc.
Intuit Inc. is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax®, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries® and Lacerte® are Intuit's leading tax preparation offerings for professional accountants. Intuit Financial Services helps banks and credit unions grow by providing on-demand solutions and services that make it easier for consumers and businesses to manage their money.
Founded in 1983, Intuit had annual revenue of $3.9 billion in its fiscal year 2011. The company has approximately 8,000 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. More information can be found at www.intuit.com.