Small businesses with less than 20 employees created 40,000 jobs in September, according to Intuit, a 0.2 percent increase.

Susan Woodward

Intuit’s data is based on approximately 84,300 small businesses customers of Intuit Online Payroll.

However, the QuickBooks and TurboTax maker noted that U.S. small business employment continued to grow slowly in September, while the hours worked and compensation rose. Revenue in August declined for the sixth consecutive month. Small business revenues are gradually recovering from recessionary depths, but are just now reaching levels seen before the recession began in 2007, according to the Intuit Small Business Revenue Index. The newly-launched Revenue Index is based on anonymized aggregated data from QuickBooks Online.

Intuit’s September revenue index indicates that small businesses overall saw their revenue decline in August.  Among the industries tracked by the index, none saw an increase this month. The accommodation/food services and retail industries saw the biggest decline at 0.7 percent, followed by the construction industry at - 0.6 percent.

In May, the construction industry saw an increase in revenue but has seen steady declines in subsequent months; in August the construction industry declined 0.6 percent.  It accounts for about 8 percent of employment among all companies and roughly 20 percent of employment for small companies, so any change in this sector is important.

Compensation increased 0.6 percent in September and now is $2,768 per month, compared to the revised August figure of $2,751 per month. Monthly hours worked increased 0.18 percent in September, at 107.2 hours.

"This month’s indexes bring both good and bad news,” said Susan Woodward, the economist who worked with Intuit to create the indexes. “The bad news is that while revenue rose earlier in this tepid recovery, they are now dropping for most industries. In addition, small business employment is growing very slowly, and is essentially flat. Couple that with the slow employment growth of less than one-tenth of a percent for big businesses, and we see a slim chance of full employment anytime soon.

“The good news is that more people are going into business for themselves,” Woodward added. “After five years of declining self-employment beginning in January 2007, we began seeing a big comeback starting in November 2011. Nearly 600,000 additional self-employed folks have been added since then, and there are now 14.2 million people who are self-employed. One theory is that the decline in revenue per business may reflect the entry of these new businesses into the economy.”

Small businesses overall saw a decline in revenue in August. The health care and social assistance saw the smallest decline of all the industries, at minus 0.3 percent, which is slightly less than the 0.4 percent decline seen in the previous month. The health care sector, has however, had the longest decline, starting in November 2011.

Based on September’s numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised upward the previously reported August growth rate to 0.2 percent from 0.16 percent. This equates to 50,000 jobs added in August, up from a previously reported 30,000 jobs, though these numbers are expected to change once the index is recalibrated.

Small business hourly employees worked an average of 107.2 hours in September, an increase of 0.18 percent, or about 12 minutes, from the revised figure of 107.0 hours in August, making for a 24.7-hour workweek.

Average monthly pay for all small business employees rose to $2,768 in September, an increase of 0.6 percent, or $17, from the August revised figure of $2,751 per month. The equivalent annual wages would be about $33,200 per year, which is part-time work for many small business employees.

Intuit’s Employment Index showed growth in overall employment in September for all regions except for the West North Central and the Middle Atlantic divisions, which fell by 0.13 percent and 0.05 percent respectively. A state-by-state breakdown showed the largest employment increases in Washington and Michigan, a trend that continued from last month. New York and Oregon saw the largest decreases.

Small Business Employment by U.S. Census Division continues to grow in most parts of the country. The data reflects employment from approximately 84,000 small business employers, a subset of small businesses that use Intuit Online Payroll. The month-to-month changes are seasonally adjusted and informative about the overall economy.