From the September 2006 issue of Entrepreneur

Small businesses reversed a months-long trend of declining payrolls by hiring more workers as the second quarter ended, and salaries of workers at small companies also rose modestly, according to the SurePayroll Small Business Scorecard.

The hiring boost was a step in the right direction for a small-business employment picture that has been dismal for more than a year, says Michael Alter, president of the Glenview, Illinois, accounting service that compiles the Scorecard. The hiring portion of the index rose 4 points in June to 10,439, but it's still down from June 2005 and for 2006 overall.

"I wouldn't say it's a positive picture yet," Alter says of the overall second-quarter Scorecard. However, he suggests the hiring improvement means that the downturn predicted for this year's second half may not materialize.

Wages also rose fractionally in June, the tenth consecutive month of higher salaries. Average salaries were up 4.13 percent in the first half of the year, which suggests they'll rise over 8 percent for the entire year. Alter considers salary growth a slightly positive mixed blessing. It helps businesses sell goods and services. "The downside is that it's more expensive to run a business," he says. To put that in perspective, small-business salaries are still below where they were two years ago.

The talent war seems to have declared a truce, at least among the businesses surveyed among SurePayroll's 16,000 small-business customers. "One in two say it's hard to find employees, so one in two say it's easy to find employees," Alter says, pointing to flat unemployment trends as further evidence of easing labor markets.