Small Business Hiring Declines, Manufacturing Rises in September

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Employment growth fell below the year-to-date monthly average in September 2017, according to the ADP National Employment Report (NER). The impact of Hurricanes Harvey and Irma likely played a role. Hiring was likely hurt by both natural disasters and increased wage pressures on small businesses. Still, strength in the goods-producing sector reveals last month's dip in hiring may not continue into the fourth quarter of 2017. "Looking through the storms the job market remains sturdy and strong," says Mark Zandi, chief economist of Moody's Analytics.

Private sector organizations added 135,000 positions in September, according to the NER, which is 102,000 fewer jobs than were added in August 2017. Still, 135,000 positions may indicate economic strength. September's employment data likely reflects the impact of natural disasters and the consistently tight talent market.

September Employment Growth Data Reveals Small Business Impact

Small businesses with 1-50 employees lost 7,000 jobs in September. While small businesses can be disproportionately affected by the upward wage pressures of a competitive talent market, this loss is unusual for 2017 trends.

Natural disasters can have a disproportionate effect on small businesses — even employers located thousands of miles from the southeast. USA Today reports that many small organizations are facing storm-related challenges, including supplier unavailability, decreased sales and displaced customers in the wake of Hurricanes Harvey and Irma.

Construction and Manufacturing Sees Job Growth

Employers in the goods-producing sector added 48,000 jobs in September, marking the second consecutive month of strong growth for the sector, which added 47,000 positions in August. The construction industry added 29,000 jobs and the manufacturing industry added 18,000 jobs.

While construction is seasonally sensitive, Construction Dive predicts strong demand for restoration projects in the Southeast for the remainder of 2017, as construction crews begin to rebuild the hurricane-damaged areas.

Analysts in the manufacturing industry are calling for continued hiring in the months to come. Institute for Supply Management revealed 13 consecutive months of growth and demand for production. Economic conditions are also favorable to support more jobs in manufacturing.

Will October See Even More Employment Growth?

Entering the fourth quarter of 2017, the most significant job market challenge impacting organizations of all sizes is likely to be talent availability, especially among highly skilled workers in construction, manufacturing and technology. As the job machine continues to power forward, U.S. organizations would be wise to continue to make talent acquisition a top concern heading into 2018.

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