Small businesses pick up hiring pace

NEW YORK Small businesses are adding jobs at a modestly faster pace, a sign the U.S. economy is slowly gaining strength.

Payroll company ADP said Wednesday that its small business customers added 58,000 jobs last month, up from 50,000 in April. The company also revised its March number to 74,000 from 60,000. Nearly two-thirds of the jobs, 37,000, were at companies with fewer than 20 workers. The rest were at companies with 20 to 49 workers.

• Survey: Private employers added 135K jobs in May
• Wealth of most Americans down 55% since recession
• Unemployment rates fall in nearly all U.S. cities

And on Tuesday, software maker Intuit said its small business customers added 35,000 jobs last month. It revised its April reading up to 35,000 from 20,000.

Both reports indicate that although small companies continue to hire cautiously, their job growth is gaining momentum. Surveys this year have found that many owners plan to hire modestly or keep their employment levels unchanged because they're not sure about the outlook for their revenue and the economy.

Small businesses account for 99.9 percent of U.S. companies and about half the nation's employment. Many economists say the economic recovery can't gain strength unless small businesses increase their pace of hiring.

Economists predict that the economy will grow by a 2 percent annual rate from April through June, down from 2.4 percent in the first three months of the year.

A third report, a survey by the National Federation of Independent Business, said employment at small businesses was virtually unchanged last month, falling 0.04 workers per firm after five months of gains. The survey questioned 715 of the advocacy group's members.

Despite the uptick in hiring among small businesses, the broader job market remains soft. ADP said Wednesday that companies added 135,000 jobs last month, fewer than the 165,000 had been expected. While higher than April's revised total of 113,000, that figure remains well below the the gains ADP reported over the winter. Those averaged more than 200,000 a month from November through February. 

Although ADP's figures are often a poor predictor of total payroll gains, investors also seemed put off by the ADP numbers. As of 12:52 p.m. Eastern, the Dow Jones industrial average was down 183 points, or 1.2 percent, to 14,995, while the broader S&P 500 had lost 21 points.

A broader look at hiring will come Friday, when the Labor Department issues its May employment report. Economists surveyed by FactSet predict the government will report that employers added 170,000 jobs last month, up from 165,000 in April and 138,000 in March. The department doesn't break out hiring numbers by company size.