The December CBIZ Small Business Employment Index, which is designed to serve as a barometer for hiring trends among companies with 300 or fewer employees, showed its largest percentage employee increase since June of last year. The uptick is an indication that hiring has improved and confidence among small business owners is on the rise.

December’s data showed a 1.54 percent increase through the month, after posting a decrease of .44 percent during November; almost a 2 percent gain month over month. In October, the index illustrated an increase of .73 percent.

Philip Noftsinger, business unit president for CBIZ Payroll Services, offers, “As expected, the small business employment data provided some positive growth during the month of December. As demand begins to increase through consumer spending, smaller employers are able to increase their headcounts in an effort to pace the expanding economy.” Noftsinger continues, “The results of this month’s report are consistent with the tone of other employment reports that we have seen throughout the month and encourages one to look to a brighter 2011.”

Additional take-away points from the December data include:

- ADP, BLS and CBIZ’s SBEI: Wednesday’s report from ADP found nonfarm private employment grew very strongly in December. While the CBIZ index focuses on smaller company sizes than that within the ADP dataset, growth within both reports should be an indicator that the United States Department of Labor’s “Employment Situation for December 2010” will also illustrate advancements in hiring.

- More wins than losses: Of the 3,099 companies included in the survey in December, almost 29 percent of the companies added to their employee headcount. However, 50.4 percent made no changes to their employee total, which demonstrates stability in worker retention. Four out of five companies covered in the survey maintained or grew payroll size. Approximately 20 percent of the companies in the index did report a decrease in their employee headcount.

- What to watch: Two lines of thinking should be considered and proven over the near and long term: Will the seasonal hiring period deflate the progress enjoyed during the last month of 2010? Or, will the small business owner, the most prolific driver of our economy’s engine, continue on a positive trajectory into 2011?

Noftsinger adds, “Small businesses are still trying to shake off the negative effects of complex government policy, tax and healthcare changes that affect the bottom line. Business demand and sentiment as well as the consumer could still be described as ‘fragile.’ I expect a number of small business owners to remain cautious toward substantial increases in employee hires over the short term as the country’s economic seas have yet to calm completely. Still, this positive trend should gain additional traction.”