Small-business hiring, which traditionally drives economic growth, is stuck in neutral, threatening to extend the U.S. economy's jobless recovery.
Small firms, employing about half of all workers, added employees in November, but at a slower pace than in October, a survey of 629 firms out today says.
Moreover, just 12 percent of such firms plan to add workers in the next three months, down from 13 percent in October, the National Federation of Independent Business survey says. Such hiring plans, which bottomed last spring, had climbed through August. They peaked at 14 percent before trending down.
The anemic hiring partly explains November's unexpectedly weak employment gains. Overall, U.S. companies added just 57,000 jobs during the month, a third of what economists expected.
Why aren't small firms hiring?
• Revenue growth is weak. Small firms won't add workers until they've got solid order backlogs, says Rebecca Macieira-Kaufmann, chief of banking giant Wells Fargo's small-business segment.
• Productivity remains high. Existing workers are cranking out goods and services at twice the historical rate.
• They're deferring hiring. In San Antonio, Southwest Credit wants to add six workers to its existing 10 to expand its equipment-leasing business. That can't happen until March, when it expects to boost its line of credit.
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