By Jolawn Victor, below, VP and UK Country Manager, Intuit
Small businesses play a critical role in the UK’s economy, with the SME share of total employment amounting to over 60 percent in 2022. We know they often operate in niche markets and are more vulnerable to changes in the economy than larger organisations – in many cases acting as early indicators of shifts at a macro-level.
Key to understanding the health of your SME, and the economy more broadly, is understanding the state of hiring and firing. Analysing this data will help business operators gauge the current state-of-play within their environment across sectors and regions, helping them make informed decisions and predictions and ultimately enabling them to not only survive, but thrive, in today’s economic climate.
For SME professionals, as well policymakers and economists, to rely on such data it must be accurate and near real-time in nature. Yet, small businesses are often underrepresented in economic data and without it, decision makers will struggle to make sense of the economic environment and support SME growth. What is needed is a source that has an unparalleled focus on small businesses to fill the gap.
Introducing… The Intuit QuickBooks Small Business Index
In March 2023, we launched the Intuit QuickBooks Small Business Index – producing publicly available data insights on the performance of firms with fewer than 10 employees. In a joint effort with globally renowned economist Professor Ufuk Akcigit, the Arnold C. Harberger Professor of Economics at the University of Chicago, the Intuit QuickBooks Small Business Index was made to give a timely and accurate analysis of small business hiring and employment in the UK, US, and Canada.
With analysis published on a monthly basis, the Index provides regular updates on job vacancy levels within UK small businesses – providing a platform for small businesses to compare and contrast their current business operations, with the wider industry context the Index provides.
What the data currently tells us about UK small businesses
The Index provides the number of job vacancies at businesses with one to nine employees – across England, Northern Ireland, Scotland and Wales and by sector – measuring how that figure has changed since the previous month.
Reported in early April, in the month of March Northern Ireland was the region that saw the most significant decrease in job vacancies in the UK, dropping -9.54% to 2,100 vacancies, whereas England had the smallest decline, down by -3.26% to 130,600.
In the same month, one to nine employees had 7,400 fewer job openings compared to figures reported the previous month by the Office of National Statistics (152,000 in February’s Vacancy Survey). This was a monthly decrease of -4.98% to 144,600 job vacancies and a greater reduction than in February – where vacancies fell by -2.5%.
Yet, whilst this decline was seen across the sectors, it was the arts, entertainment, and recreation sector that saw the sharpest drop by -11.4%. Notably, the education sector observed the smallest decline of -0.65%.
A barometer for the wider economy
With job vacancy fluctuations being seen across all sectors, it can help small businesses and policymakers gauge broader economic trends – including changes in labour market conditions, shifts in industry dynamics and economic slowdowns.
Job vacancies can help illustrate the current small business climate and how conducive it is for them to operate in. Positively, if there is a significant rise of job vacancies within a particular sector, it might be an indication of growing businesses or simply more businesses entering the sector as start-ups. In contrast, a significant decrease in job vacancies, as we saw in the arts, entertainment and recreation industry, could demonstrate a reduced willingness for small businesses to take on new hires or a lack of financial resources to pay for additional staff. This could be due to, but not limited to, factors such as lower consumer spending or decreased investment.
Fluctuating job vacancies can also help paint a picture of shifting industry trends, including the level of innovation within a business, depending on the sector these vacancies are in. For example, an increase in job vacancies could echo an overall healthy shift in new developments and innovation – where more employees are needed. Similarly, a decrease in job vacancies, such as those seen in the construction sector (which fell by 9.17% resulting in 100 net fewer vacancies) could indicate a stagnancy in sector growth.
A check on job vacancy levels within an industry could also show a rise in job popularity within a certain sector. For example, a decrease in professional vacancy levels suggest more people are occupying the vacancies in this sector and could be telling of a shift in employee expectation of working conditions. As remote working has become the norm amongst many professionals, decreasing vacancies in this sector could highlight a growing demand amongst those looking for flexible jobs and a better work/life balance.
Using job vacancies of small businesses as part of wider analysis
Job vacancy levels in small businesses play a key role in helping understand the overall economic climate – alongside measurements of employment rates, GDP and public sector investment. Whatever insights the data shows, this sort of knowledge empowers small businesses to make informed decisions about their business operations and equips policymakers and economists alike with the tools to help measure, predict and inform change.
As a global financial technology platform that champions the prosperity of small businesses, at Intuit QuickBooks we’re excited to continue to provide this barometer on vacancies monthly – and with an approximate two week lead time compared to other vacancy data. We hope both the small business community and policymakers are able to make more informed, data-driven decisions that promote growth and protect the future of the economy.