Last month I reported on a statistical analysis by Josh Millet at Criteria Corp., suggesting that the economic climate for small business is improving. Millet now has an update (posted on 1 Apr but I assume it’s serious):
With the final March numbers now in, the Hiring Activity Index nudged upwards very slightly again this month, to 62.3% from 61.4% in February. To me [Millet] this is an encouraging sign that the February jump in hiring activity by small businesses was not just a blip. If the data we’re seeing means anything, the hiring situation for small and medium-sized businesses has begun to rebound.
Here’s the graph I made of his numbers:
Millet also answers a bunch of potential criticisms of his measure:
There were some interesting comments and questions about the HAI and its potential utility as a leading economic indicator. We [Criteria Corp.] do sell our software on a subscription basis, and someone pointed out that if non-active subscribers didn’t renew because of the downturn, this could artifically inflate the HAI because it is based on the percentage of our customer base that is actively doing pre-employment testing in a given month. This is a legitimate point, but I [Millet] will say that while low levels of use are a reason that customers sometimes do not renew, we haven’t see non-renewal rates climb much since November, when the HAI dropped by 10 points. It was also suggested that higher numbers of job-seekers may result in applicants for positions that may not have been desirable previously–this is theoretically possible, but I don’t see much evidence for it. What is most certainly true is that companies are getting far more applicants per open positon, as I previously blogged about here. However, since the HAI is based on the percentage of companies testing in a month, not the overall volume of tests, this shouldn’t influence the HAI unduly, and wouldn’t in any case explain the plunge in November and (partial) rebound in February.
P.S. Here’s the graph that Millet made:
The graphs are similar, but I like mine better:
– My graph has a more descriptive title (something I learned from Howard Wainer’s example).
– His graph has a bunch of horizontal lines that add nothing (in my opinion).
– His graph has too many labels on the y-axis, enough that it’s hard to read; also it’s completely unnecessary to label 55% as “55.0%”–that’s just a gratuitious way to reduce readability.
– My graph is smaller and fits better on the computer screen; also I think smaller graphs are easier to read because you can grasp the entire graph without moving your eyes.