Intuit found that small business revenues are beginning to approach their pre-recession levels.
The new Intuit Small Business Revenue Index, based on anonymized, aggregated data from QuickBooks Online, provides current information on monthly small business revenue. It complements Intuit's monthly Small Business Employment Index to provide a more complete picture of the economic health of the nation's small businesses based on revenue, hiring and compensation trends.
"There are many sources of information about the activity at big companies, but very few on the activity at small businesses," said Kiran Patel, executive vice president and general manager of Intuit's Small Business division. "Intuit is one of the few companies to have this data. The launch of the Revenue Index helps fill this gap in the market and provides small businesses with a better understanding of how they are doing compared to others."
The Revenue Index shows that small businesses were hard hit by the downturn, and are just starting to reach pre-recession revenue levels. Different industry sectors of small business were hit harder than others, and at different points in the recession.
Small businesses in the professional, scientific and technology fields fared the best through the downturn. Despite a large decline starting in late 2008, small business revenues now exceed their pre-recessionary levels. Meanwhile, revenues for the real estate and construction industries began falling in 2007 and have seen little recovery. The health care and social assistance sector shows a mild decline in revenues over the past year.
The changes in small business revenue by industry are consistent with many accounts of economic activity over the past seven years. Construction sector revenue stopped growing at the beginning of 2006, began a slow decline in mid-2007, and then a more dramatic decline starting in mid-2008.
Revenues for real estate services and leasing declined from mid-2005 to early 2009 and have been flat since then. Revenues for professional services grew until the fourth quarter of 2008, and then declined abruptly around the time of the bank crisis in September 2008. Revenues have been steadily increasing since mid-2009.
The health care and social assistance sector also showed a small decline in revenues to businesses in this sector, but only recently, starting in 2011.
"In general, the health care and social assistance sector is much more resistant to the business cycle than are the other industries," said Susan Woodward, the economist who worked with Intuit to create the Intuit Small Business Indexes. "But this sector saw a decline in revenues beginning in 2011 that continues through today. A number of factors could account for this, including a drop in coverage and spending through employer-provided health care plans. This may be partially a response to the recession, but also a more general response to the change in health care policy."
Small Business Employment Index
The monthly Small Business Employment Index, which is based on data from Intuit Online Payroll, shows that small business employment started growing in the fall of 2009 through 2011 and continues, albeit slowly, into 2012. In April there was a 0.2 percent increase in jobs for an annual growth rate of 2.5 percent. This equates to approximately 40,000 jobs created in April though Intuit plans to recalibrate the Index in the coming months and expects these numbers to change.
Based on April's numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised downward the previously reported March growth rate to 0.2 percent. This equates to 45,000 jobs added in March, down from a previously reported 65,000 jobs, though these numbers are expected to change once the Index is recalibrated.
Decrease in Hours Worked, Increase in Compensation
Small business hourly employees worked an average of 107.3 hours in April, a decrease of 0.14 percent, or around eight minutes, from the revised figure of 107.4 hours in March, making for a 24.8-hour workweek. Average monthly pay for all small business employees increased to $2,680 in April, an increase of 0.11 percent, or $3, from the March revised figure of $2,677 per month.
The equivalent annual wages would be about $32,200 per year, which is part-time work for many small business employees.
Small Business Employment by Geography
The Intuit Index shows overall employment growth in all census divisions for April 2012, while a state breakdown shows increases in all states that the index covers except for three.
U.S. Census Division Percent Change in Employment
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East North Central 0.15%
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West North Central 0.03%
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Middle Atlantic 0.09%
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Mountain 0.3%
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New England 0.3%
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Pacific 0.2%
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South Atlantic 0.3%
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East South Central 0.6%
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West South Central 0.3%
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Small Business Employment by U.S. Census Division continues to grow in all parts of the country. The data reflects employment from 80,000 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.
State Percent Change in Employment
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Arizona 0.9%
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California 0.2%
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Colorado 0.5%
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Florida 0.3%
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Georgia 0.3%
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Illinois -0.03%
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Maryland 0.2%
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Massachusetts 0.4%
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Michigan 0.3%
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New Jersey 0.3%
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New York 0.12%
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North Carolina 0.4%
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Oregon -0.4%
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Pennsylvania -0.5%
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Texas 0.3%
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Virginia 0.7%
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Washington 0.4%
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Small business employment by state is up for most states in which Intuit Online Payroll has more than 1,000 small business firms represented. The month-to-month changes are seasonally adjusted and informative about the overall economy.
