US small business hiring slows in June, wages rise

WASHINGTON, July 6 Wed Jul 6, 2011 12:20pm EDT

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WASHINGTON, July 6 (Reuters) - Hiring by U.S. small businesses slowed in June but employers increased hours and raised compensation for existing workers, an independent survey showed on Wednesday.

Intuit, a payrolls processing company, said small businesses added 45,000 jobs last month after increasing employment by 60,000 in May.

The survey is based on responses from about 66,000 employers at businesses with fewer than 20 employees which use the Intuit Online Payroll and covered the period from May 24 to June 23.

It comes ahead of the release on Friday of the government's more comprehensive employment report for June. Nonfarm payrolls are expected to have increased 90,000, picking up a bit from May's meager 54,000 gain, according to a Reuters poll.

The labor market is being watched anxiously for signs that the economy is positioned for a second-half comeback after activity in the first six months of the year was curbed by rising commodity prices and supply chain disruptions from Japan following a devastating earthquake in March.

The Intuit small business employment index rose 0.2 percent in June after advancing 0.3 percent in June.

Given the uncertain outlook, employers are opting to boost hours for existing workers instead of hiring. Average hours for hourly-paid employees in small businesses rose 0.2 percent in June after slipping 0.1 percent in May, while average monthly pay increased 0.2 percent after dipping 0.1 percent in May.

"It's good to see an increase in the number of hours worked. It's not clear what's driving this rise," said Susan Woodward, the economist who helped to develop the survey.

Woodward, however, noted that other data showed a recovery in both monthly revenues and income for industries involved in housing, including construction and real estate services.

"These recoveries are consistent with house prices rising, nationally, for the first time in many months," she said. (Reporting by Lucia Mutikani; Editing by James Dalgleish)

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