U.S. Small Businesses See Major June Job Drop

Job growth is finally starting to lose steam in the United States. Last month, growth in the U.S. private sector missed Wall Street expectations with only 102,000 positions added, well short of the 140,000 new positions predicted. Even though larger businesses are adding to their payrolls, small businesses are taking a hit. Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said that "while large businesses continue to do well, small businesses are struggling as they compete with the ongoing tight labor market". She added that "the goods producing sector continues to show weakness. Among services, leisure and hospitality’s weakness could be a reflection of consumer confidence.”

The worrying trend can be seen on the following infographic which shows major gains for larger companies in June. For small enterprises, which traditionally form the backbone of the American economy, things are bleaker. Companies with 1 to 19 employees lost 37,000 positions last month. Mark Zandi, chief economist of Moody’s Analytics, said “the job market continues to throttle back. Job growth has slowed sharply in recent months, as businesses have turned more cautious in their hiring. Small businesses are the most nervous, especially in the construction sector and at bricks-and-mortar retailers.”