Are major street indicators showing a holiday season slowdown?

Economic indicators and recent interest rate hikes have sent mixed messages about short-term expectations around inflation and the potential for a recession.

Work hours continued to slow and employees at small businesses differed from the previous year, likely as a result of reduced vacation spending.

Over the past quarter, interest rate hikes and economic indicators on inflation and employment have led to widespread speculation that a recession is expected in 2023. To understand how the broader economic environment impacted small businesses and their employees during the 2022 holiday season, we analyzed behavioral data from more than two million employees working at more than one hundred thousand SMBs.

Summary of Findings: Homebase high-frequency timesheet data indicate a steady slowdown in hours worked and the number of employees employed in most industries and major metro areas.

  • Our key high street health metrics – hours worked and employees employed – continued their previous month-over-month declines in December. The number of employees employed fell 3.5 percent from the 7-day rolling average in December compared to November. December’s decline is greater than what we’ve seen at the same time in previous years.
  • Most industry sectors showed a decline in the number of workers employed in mid-December versus mid-November, more so than in the past. The declines were steeper than the corresponding period in 2019, with hospitality (-7.0%) and caregiving (-4.3%) showing the biggest declines. Entertainment, while softer than comparable levels in 2019, led the trend with monthly growth (+0.3% vs. November).
  • Hours worked across the top 5 major metro areas saw a steady decline. The decline is a consistent trend over the past two quarters, though Chicago and Los Angeles saw the most significant drops from a year ago.

The percentage of employees working continued to decline after the Thanksgiving holiday, down 3.5 percentage points from the previous month. This downward trend is slightly higher than what we have seen at the same time in previous years.

Working employees
(Rolling 7-day average; compared to January of reporting year)
Main Street Health Metrics1
(7-day average; compared to January 2022)

1. Some significant reductions due to major US holidays. A pronounced dip in mid-February 2021 coincides with a period of power shortages in Texas and severe weather in the Midwest. In late September, the sinkhole coincided with Hurricane Ian. Source: Homebase data.

Most industries save for recreation have seen a clear decline in employees working weeks leading up to the 2022 holiday; In a change from our November data, beauty and wellness and care were the farthest below their corresponding 2019 levels.

Change in percentage of employed workers
(Compared to January 2022 baseline using 7-day rolling average)1
Change in percentage of employed workers
(using mid-December vs. mid-November, January 2022 and January 2019 baselines) 1

1. December 11-17 vs November 13-19 (2022) and December 8-14 vs November 10-16 (2019). Pronounced dips usually coincide with major US holidays. Source: Homebase data

Hours worked in the top 5 MSAs continued to decline after the Thanksgiving holiday compared to mid-November levels, consistent with the previous month-over-month trend. As in previous months, Los Angeles and Chicago are seeing the most significant drops from 2021 levels.

Hours worked
(Rolling 7-day average; relative to January 2020 (pre-Covid))

1. Some significant reductions due to major US holidays. A pronounced dip in mid-February 2021 coincides with a period of power shortages in Texas and severe weather in the Midwest. Source: Homebase data.

For a PDF of our December report, please see this PDF; If you wish to use this data for research or reporting purposes, please mention Homebase.

PDF link to: Homebase December 2022 Main Street Health Report – EOY

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