The Cbiz Small Business Employment Index rose 1.34% on a seasonally adjusted basis in May. The report with the index noted small businesses remain focused on hiring and retaining talent as demand increases in the summer season.

“The reading for May reflects the general pattern of strengths and weaknesses in the economy,” said Anna Rathbun, chief investment officer at Cbiz Investment Advisory Services. “Small manufacturing and tech businesses are trying to control costs as they face continuing challenges, meanwhile service-oriented sectors are continuing to see job gains due to labor shortages in these areas.”

On the industry level, the most notable job gains were seen in accommodation and food services, administration and support services; arts, entertainment, and recreation; and rental and leasing services. Conversely, hiring declined in manufacturing, mining, not-for-profit, and technology and life sciences.

Regionally, the report found an increase in hiring in the Northeast and Central regions, at 2.37% and 1.61% respectively. The Southeast region witnessed mild growth of 0.36% and the West remained flat at 0.02%.

Additionally, 24% of companies in the index increased staffing, 59% maintained their existing headcounts and 17% reduced employment totals.

Rathbun noted American manufacturing has experienced a contraction in activity for several months now and the May report reflects some of the decisions small companies have implemented to manage costs.

“On the other hand, the multi-family housing market is seeing some activity as the school year comes to a close and any planned moves are starting to take place, leading to job gains in those sectors,” Rathbun said.

The Cbiz Small Business Employment Index tracks payroll and hiring trends for more than 3,300 companies that have 300 or fewer employees.