Small business revenues and employment are slowly growing but more growth is needed to reach prerecession levels.
These are among the results for the monthly Intuit Inc. (Nasdaq: INTU) Small Business Employment and Revenue Indexes, which together provide a complete and current picture of the economic health of the nation’s small businesses.
The Small Business Revenue Index shows that revenues have been growing slowly and are starting to gradually approach 2007 prerecession levels with an upturn in revenues for certain industries, a flat level for others, and no decline for any. The index is based on data from QuickBooks Online and covers the period from January 2005 through April 2012.
The Small Business Employment Index shows that employment expanded slowly growing by 0.2 percent in May, for an annualized rate of 2.5 percent. The index is based on data from Intuit Online Payroll and covers the period from January 2007 through May 23, 2012.
Small Business Employment Index
Small business employment increased by 0.2 percent in May, which equates to approximately 40,000 jobs created, though Intuit is recalibrating the Index and expects these numbers to change.
“The employment and revenue indexes tell a consistent story,” said Susan Woodward, the economist who worked with Intuit to create the Intuit Small Business Indexes. “Both indicate there is a recovery underway. We need growth at this level for two more years for small business employment to return to the level we saw in early 2007.”
Small Business Revenue Index
In April, retail, professional services and other services saw upticks in revenue, with small improvements in the construction and real estate industries. Small businesses in the accommodation and food service industry, along with the health care and social services sector, saw flat revenue levels.
“The industry breakouts of the revenue indexes help us understand why the recovery is slow – construction is still far below normal,” said Woodward. “We know from other federal data as well that construction is still very depressed. Single family construction is running about 600,000 units per year, compared to 1.5 million units per year in normal times.”
Based on May’s numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised upward the previously reported April growth rate to 0.3 percent. This equates to 60,000 jobs added in April, up from a previously reported 40,000 jobs, though these numbers are expected to change once the Index is recalibrated.
Decrease in Hours Worked, Compensation
Small business hourly employees worked an average of 106.4 hours in May, a decrease of 0.6 percent, or around 42 minutes, from the revised figure of 107.1 hours in April, making for a 24.6-hour workwee.
Average monthly pay for all small business employees decreased to $2,688 in May, a decrease of 0.13 percent, or $4, from the April revised figure of $2,692 per month. The equivalent annual wages would be about $32,300 per year, which is part-time work for many small business employees.
Small Business Employment by Geography
The Employment Index shows overall employment growth in May for all census divisions, with the Mountain and East South Central Regions seeing the most growth. A state breakdown shows increases in all states that the index covers except for Oregon and Pennsylvania. The top three states for growth are Arizona, Colorado and Virginia.
State Percent Change in Employment
New Jersey 0.16%
New York 0.16%
North Carolina 0.3%
About The Intuit Small Business Indexes
The Intuit Small Business Indexes provide unique, near real-time information each month on the activity of the smallest businesses in the U.S. in terms of revenue, hiring and compensation trends. The Revenue Index, which covers the period from January 2005 through April 2012, is based on anonymized, aggregated data from 170,000 small businesses, a subset of users that use Intuit’s QuickBooks Online financial management offering. The Employment Index, which covers the period from January 2007 through May 23, 2012, is based on anonymized, aggregated data from 78,000 small business employers, a subset of users that use Intuit Online Payroll. Together, the indexes provide a more complete picture of the economic health of the nation’s small businesses.
About Intuit, Inc.
Intuit, Inc. (intuit.com) is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax®, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries® and Lacerte® are Intuit's leading tax preparation offerings for professional accountants. Intuit Financial Services helps banks and credit unions grow by providing on-demand solutions and services that make it easier for consumers and businesses to manage their money.
Founded in 1983, Intuit had annual revenue of $3.9 billion in its fiscal year 2011. The company has approximately 8,000 employees with major offices in the United States, Canada, the United Kingdom, India and other locations.