It may be freezing outside, but hiring is heating up at small businesses across the country.

According to December’s Intuit Small Business Employment and Revenue Index, U.S. small business employment grew last month by 20,000 jobs, marking the second consecutive month of gains for the second half of 2013.

“The most important thing is that employment has kind of resumed growing,” says economist Susan Woodward, who helped prepare Intuit’s index. Woodward says employment at small businesses with 20 or fewer workers had flatlined from June to October.

But while the recent uptick in hiring is a good sign, Woodward says the small business economy is still lagging far behind the overall U.S. economy when it comes to employment.

“From the trough [during the recession], private payrolls have recovered 7%, but small business payrolls have only recovered 2.8%,” says Woodward.

Construction a Bright Spot for Small Businesses

Construction is the foundation of the small business economy – and Woodward says it’s starting to pick up.

“Small business is very construction heavy,” says Woodward.

Construction employs 5% of workers when counting businesses of all sizes. When it comes to small businesses, however, construction companies employ about one-fifth of workers.

“Construction looks good, and if we get up to 1.5 million [annual housing starts], that would be very wonderful,” says Woodward.

Cold Weather Freezes Hiring

Though hiring did uptick in November and December, Woodward says the extremely cold weather being felt in areas of the country may have a chilling effect on small business employment.

“Almost all of the states had an increase in employment in December, but the weakest areas were the extreme north of New England and the area around the Great Lakes,” says Woodward.

“If it’s average bad weather, the seasonal adjustment will take care of it,” says Woodward. “If it’s way worse, it doesn’t.” Michigan registered the largest decline of employment, with a decrease of 0.18%.

The Intuit Small Business Index is based on data from 200,000 small business employers that use Intuit Online Payroll and QuickBooks Online Payroll. The data for the December employment index was taken from November 24 through December 23.

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