Improving the U.S. economy requires a group effort. Like the parts of an engine, all the components have to work in tandem for it to function as a well-oiled machine should.
Small businesses lend a helping hand to the process. According to the most recent employment report released by ADP, small-business owners added approximately 63,000 new jobs to their payrolls in August, up from 61,000 in July. More specifically, among small businesses employing 1 to 19 workers, 24,000 new jobs were developed. Among companies with between 20 and 49 employees, the total was 38,000.
Large companies add 71,000 jobs
Big businesses slightly outperformed small businesses in job creation in August, which by definition employ 500 to upwards of 1,000 and beyond. These companies added 71,000 positions in August, 25,000 of them coming from companies that have between 500 and 999 workers and the remaining 46,000 from large businesses whose staff levels are over 1,000, the report said.
ADP Vice President Ahu Yildirmaz, who also heads the New Jersey-based human resource management firm's research institute, indicated that all businesses had a hand to play in buoying the nation's economy last month.
"Job growth in August was stable and consistent with levels from previous months as consumer conditions improve," explained Yildirmaz. "Continued strong growth in service-providing jobs is offset by weakness in goods-producing areas."
Indeed, jobs coming from the goods-producing sector may have been the one blemish on an otherwise sterling month for employment. All together, goods-producing firms trimmed employment by 6,000. But these cuts were more than compensated by companies that provide services, creating north of 100,000 new employment opportunities.
"The American job machine continues to hum along," noted Mark Zandi, Moody Analytics chief economist. "Job creation remains strong, with most industries and companies of all sizes adding solidly to their payrolls. The U.S. economy will soon be at full employment."
But what does "full employment" mean?
What constitutes 'full employment'?
Economists have differing definitions regarding what qualifies as full employment. Some believe it's when the unemployment rate is below 5 percent, while others say joblessness needs to be between about 3 and 4.5 percent. Thanks in part to over 70 consecutive months of uninterrupted job growth in the private sector, the national unemployment rate has stayed at or below 5 percent since October of last year, according to the U.S. Department of Labor. Year-to-date, its lowest point was in May at only 4.7 percent.
A healthy rate of job creation is expected to continue as 2016 winds its way to a close. The net employment outlook for the fourth quarter is up 18 percent, the most optimistic forecast from ManpowerGroup, a recruitment firm, since the Great Recession. Kip Wright, senior vice president of Manpower North America, said that the biggest challenge for business owners will be finding hires who are the right fit so productivity can ramp up as soon as possible.
The strongest region for hiring activity is expected to be in the South. Of the country's 100 largest metro areas, Miami, FL; Charleston, SC; Raleigh, NC and Nashville, TN are four of the top five metropolitan statistical areas anticipated to be the most heavily involved in recruitment during the fourth quarter, the report said.
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