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Poised for Growth, but Not Hiring

Wall Street Journal Online (02/01/12) Emily Maltby

Small businesses with fewer than 50 employees added around 95,000 jobs in January, down from 136,000 in December and 111,000 in November, according to the new report from Automatic Data Processing Inc. While small-business owners are more optimistic about conditions at their firms, that optimism has not been translating into a hiring surge.

Over the past year, 22% of the 450 business owners polled added to their payrolls, and 30% expect to do so this year. Moreover, the number of small businesses posting revenue gains, expressing confidence about the future, and obtaining financing has increased since the previous survey in July. However, Todd McCracken, president of the National Small Business Association, notes the improving conditions have not prompted small businesses to increase hiring because they want to be in a better cash position before doing so. He says hiring employees is “a long-term decision,” and small businesses will remain cautious until they feel more confident about the broader economy.