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Goods Producing Small Businesses Struggle To Keep Up With Service Sector

Written by Ken Gaebler
Published: 9/11/2009

Small businesses in the goods-producing sector have been hit particularly hard by the recession, a recent data analysis revealed.

Though it is not surprising news, for small businesses in goods-producing sectors such as manufacturing and construction the recession has been particularly damaging.

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By analyzing nonfarm private payroll data from Automatic Data Processing, Case Western entrepreneurial professor Scott A. Shane found that there is a significant discrepancy between employment levels for small businesses in the services sector and those of goods-producing small businesses.

In an article in the New York Times on Friday, Shane reported that employment in service-sector small businesses in August 2009 was at 97 percent of its pre-recession level (in December 2007), while employment in goods-producing small businesses was at 85 percent of its pre-recession level.

Shane points to the housing crisis and the decline in the auto industry as having caused severe difficulties in the manufacturing and construction industries, both of which are included in the goods-producing sector.

Overall unemployment continued to rise in August, according to the latest report from the Bureau of Labor Statistics - the 217,000 nonfarm payroll jobs lost in August represented an improvement over July's 247,000 job losses, but the unemployment rate increased by 0.3 points to reach 9.7 percent.

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