The January CBIZ Small Business Employment Index, which is designed to serve as a barometer for hiring trends among companies with 300 or fewer employees, decreased by 2.62 percent through the month, after posting an increase of 1.54 in December; a 4 percent drop month over month.

The decrease was the largest drop since January 2010 and speaks to the seasonal hiring trends in the small business sector, which tends to be more volatile than larger business sectors.

Philip Noftsinger, business unit president for CBIZ Payroll Services, offers, “This month’s report is a significant step back from the gains we saw in the 4th quarter. Certainly there is some seasonality that was anticipated in the report, but I don’t think you can ignore the size of the change. That said, it’s important to be cautious and not overreact to a one month change.”

The survey also saw the percentage of companies decreasing employee headcount spike to 34 percent in January, a jump from 20 percent the month before. Of the 2,901 companies included in the survey for January, almost half saw no change to their employee headcount, highlighting the uncertainty that remains in the sector.

“The companies that employ fewer than 300 people are more prone to swings in payroll headcount. What we’ve seen in this month’s data looks to be a seasonal reduction in staff and we expect the longer term trend to be more consistent with a slow-paced economic recovery,” says Noftsinger.