Small Business Data Signals Job Growth
Contrary to some broader economic indicators, new data from GoDaddy and UCLA suggests small business trends are a leading indicator for the job market. The research found that accelerating growth in digital small businesses in late 2025 points toward stronger-than-expected job gains in the coming months.
The "Small Street" data offers a different perspective from traditional economic measures. This research from GoDaddy's Small Business Research Lab and UCLA Anderson Forecast analyzes the economic impact of over 20 million online microbusinesses, which are often overlooked in conventional analyses. These businesses typically have fewer than 10 employees. This new approach suggests that the creation of new businesses is a more direct indicator of economic health than stock market performance. A 1% increase in the formation of small businesses is linked to a 0.16% increase in payroll employment growth and a 0.15 percentage point drop in unemployment. Historically, these small business trends have preceded changes in the national job market by three to four quarters. The GoDaddy/UCLA Microbusiness Activity Index (MAI) tracks the health of these small enterprises. It consists of three parts: the availability of internet and human capital (Infrastructure), the number of microbusinesses (Participation), and the maturity of their websites (Engagement). The late 2025 surge was largely driven by the "Engagement" sub-index, which saw its biggest annual increase ever, spurred by the adoption of generative AI tools. The impact of these small businesses on job creation is significant. According to the research, each new microbusiness owner creates approximately eight additional jobs in their local county. This is a substantial increase from 2020, when one microbusiness created only two jobs. This optimistic forecast from the small business sector contrasts with other economic predictions for early 2026. Many economists had anticipated "uncomfortably slow" growth in the labor market, citing business uncertainty due to tariffs and a general cooling of the job market throughout 2025. Some firms had even projected a rise in unemployment to around 4.5%.
