Seemingly each day a large technology or financial services company announces layoff plans or is rumored to do so. Fears of a pronounced economic slowdown in 2023 are generally cited as the chief reason for these actions. However, some announcements are doubtless copycat reactions: “If my competitor is sensing a downturn and cutting headcount to get ahead of this, I should too…”
Despite these unpleasant anecdotes, most economists believe the labor market remains tight. Weekly jobless claims — in the vicinity of 230,000 in the U.S. — are quite low by historical standards. In addition, the current 3.7% U.S. unemployment rate is just above a 50-year low.
Unfortunately, the labor market may be growing less sturdy at a rapid pace, according to a recent survey of more than 6,900 small business owners by Alignable, a small business referral network with clients across North America. Approximately 15% of U.S. small businesses are laying off employees in December, markedly higher than 8% in November and 6% in October. The poll was conducted over the period from November 19 through December 8. About 87% of respondents had twenty or fewer employees; some 77% had ten or less.
Furthermore, 74% of American small businesses reported no hiring plans in December, up significantly from 62% in November. Approximately 67% of small businesses did not expect to add new employees in October.
One of the most remarkable aspects of Alignable’s survey is the synchronization of data between the U.S. and Canada. Approximately 15% of Canada’s small businesses also plan to lay off workers in December, and 74% have no intention of adding staff this month. By province, small business owners in Ontario (16%) are most inclined to cut staff in December, while bosses in Alberta (11%) are the least likely to implement layoffs.
An especially interesting detail in this report was the sharp increase in the number of restaurants and beauty salons across North America that plan to implement layoffs in December. About 11% of small restaurant owners plan to do so, up from 6% in November and 8% in October. The same statistics for beauty salon owners are 6%, 1%, and 1% for December, November and October, respectively. Not many months ago, both these business types could seemingly not find qualified employees fast enough to meet their needs.
Among all small businesses (and perhaps for the economy as a whole), manufacturing remains a bright spot. Only 4% of small manufacturing companies plan layoffs in December, although that is up from just 1% in November.
Information for this briefing was found via the links provided and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
