ADP Finds Small Businesses Lost Jobs in February

Small businesses lost 18,000 jobs in February, according to a report by payroll giant ADP.

The company’s monthly employment report found those job losses contributed heavily to an overall loss of 20,000 non-farm jobs in the private sector last month among businesses of all sizes. Midsized businesses with 50 to 499 employees gained 8,000 jobs in February, according to ADP, the first monthly gain since January 2008, but large businesses with 500 employees or more shed 10,000 jobs.

In contrast, another payroll vendor, Intuit, found that small businesses gained 40,000 new jobs in February, based on data from its online payroll customers (see Intuit Sees Small Business Hiring Rebound). However, Intuit defines small businesses as those with 20 employees or less, while ADP defines them as businesses with 49 employees or less.

Joel Prakken, chairman of Macroeconomic Advisers, which compiles ADP’s monthly payroll reports, sees good signs in the latest report. “The February employment decline was the smallest since employment began falling in February of 2008,” he said in a statement. “If the recent trend continues, and given first-quarter GDP growth of 5.9 percent, private employment could rise next month for the first time in two years.”

He added that nonfarm private employment in the service-providing sector increased by 17,000 in February, the second consecutive monthly increase. However, that employment growth was not enough to offset continued losses in the goods-producing sector. Employment in the goods-producing sector declined 37,000, with employment in the manufacturing sector increasing by 3,000. The employment increase in the manufacturing sector was the first since January 2008.