Paychex | IHS Markit Small Business Employment Watch: Job Growth Tightens Among Small Businesses in March; Wage Growth Holds Steady

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Paychex, Inc.

Apr 03, 2018, 08:30 ET

ROCHESTER, N.Y., April 3, 2018 /PRNewswire/ --

Falling 0.12 percent to 99.65 in March, the Small Business Jobs Index has been below 100 for the past nine months and has slowed 1.07 percent since March 2017. Hourly earnings grew $0.69 in the past year to $26.48 for a 12-month wage growth of 2.66 percent, virtually unchanged from 2.67 percent YOY growth in February.

At 99.65, the Paychex | IHS Markit Small Business Jobs Index has slowed 1.07 percent year-over-year.

At $26.48, hourly earnings growth in March increased 2.66 percent YOY ($0.69).

The Small Business Jobs Index decreased 0.12 percent to 99.65 in March
At $26.48, hourly earnings growth increased 2.66 percent YOY ($0.69); one-month annualized hourly earnings growth increased 2.94 percent; weekly earnings growth outpaced hourly earnings, up 2.90 percent YOY
South leads regions in employment growth; West ranks highest for wage growth
Tennessee rose to the top in state job growth; Arizona remains first in annual hourly earnings growth
Denver regained first place among metros in small business job growth; Phoenix continues to lead in small business wage growth
Construction industry maintains steady job growth at 100.42; Leisure and Hospitality leads industry sectors in hourly earnings growth

Small business employment growth declined slightly in March, while wage growth remained largely consistent, according to the latest Paychex | IHS Markit Small Business Employment Watch. Falling 0.12 percent to 99.65 in March, the Small Business Jobs Index has been below 100 for the past nine months and has slowed 1.07 percent since March 2017. Hourly earnings grew $0.69 in the past year to $26.48 for a 12-month wage growth of 2.66 percent, virtually unchanged from 2.67 percent YOY growth in February. Due to continued increases in hours worked, weekly earnings growth is higher than hourly earnings growth at 2.90 percent.

"Small business job growth slowed slightly yet again, to its lowest point in more than seven years," said James Diffley, chief regional economist at IHS Markit.

"Larger employers are adding more workers than smaller businesses at this time, though the tightening labor market is impacting businesses of all sizes," said Martin Mucci, Paychex president and CEO. "Interestingly, as job applicants are scarce, this month, we saw one-month annualized hourly earnings increase by nearly three percent among small businesses, compared to the annual growth rate of 2.66 percent. This could be the beginning of accelerating wage growth to attract more employees."

National Jobs Index

The national index has been below 100 for the past nine months.
At 99.65, the Paychex | IHS Markit Small Business Jobs Index has slowed 1.07 percent year-over-year.

National Wage Report

Hourly earnings growth peaked at 2.96 percent in July, but has steadily decelerated to 2.66 percent in March.
On the strength of increased hours worked, weekly earnings are higher than hourly earnings, up 2.90 percent year-over-year.
One-month annualized hourly earnings growth improved sizably to 2.94 percent in March, up from just 2.01 percent four months ago, in November.

Regional Jobs Index

The South is the only region with an index above 100, with strong job gains in Construction and Manufacturing over the past year.
The West has the lowest index at 99.29, though its levels have been stable in 2018, specifically in the Pacific division.

Regional Wage Report

The West leads regions in earnings growth in March (3.32 percent hourly, 3.70 percent weekly).
Hourly earnings growth in the Midwest trails all other regions at 2.27 percent.

State Jobs Index

Tennessee regained its position as the top state for small business employment growth with an index level of 101.82.
After gaining momentum in the first two months of 2018, Georgia fell significantly in March and is now one of 12 states below 100. This is despite ranking in the top 10 among all states in overall job growth, per BLS.
Texas had the largest one-month gain, increasing 0.66 percent to an index level of 100.88, the fourth highest among states.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

Arizona, California, New York, and Missouri are the only states with three percent or higher hourly earnings growth.
Conversely, Ohio, Virginia, and Maryland trail at less than two percent growth in hourly earnings.
Tennessee has seen rapid acceleration in hours worked during the past year, which helped boost weekly earnings growth to 4.51 percent, second only to Arizona.
Virginia's hourly earnings have decelerated in recent months, from averaging more than three percent during 2017, to below two percent in March.

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index

Vacillating between first and second place for the fourth straight month, Denver displaced Seattle as the top-ranked metro for small business employment growth. Both are the only metros with index levels surpassing 101.
While Houston and Dallas are in third and fourth place among metros, 100.54 and 100.29 respectively, the paths to those rankings have differed. Houston has the best 12-month growth rate, 2.74 percent, while Dallas has the worst, -2.56 percent.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

The Southwestern metros, Phoenix, San Diego, and Riverside, lead wage gains by a large margin, all with weekly earnings growth above four percent.
Tampa, Seattle, Boston, and Chicago trail significantly, with less than two percent wage gains in March.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

Small business jobs growth in the Construction industry remains stable with an index level of 100.42 in March.
Three sectors, Manufacturing, Professional and Business Services, and Trade, Transportation, and Utilities, have index levels below 99.
At 102.11, Other Services (except Public Administration) leads small business jobs growth, but has the weakest one-month and 12-month growth rates among industries.

Note: Analysis is provided for seven major industry sectors.

Industry Wage Report

Leisure and Hospitality leads industry sectors with 3.89 percent growth in hourly earnings, with Professional and Business Services trailing at 2.30 percent.
With solid growth in hours worked year-over-year, Trade, Transportation, and Utilities leads weekly earnings growth among industries, and has been slightly above four percent for the past seven months.

Note: Analysis is provided for seven major industry sectors.

For more information about the Paychex | IHS Markit Small Business Employment Watch, including interactive charts detailing all data at a national, regional, state, metro, and industry level, visit www.paychex.com/employment-watch and sign up to receive monthly Employment Watch alerts.

*Information regarding the professions included in the industry data can be found at the Bureau of Labor Statistics website.

About the Paychex | IHS Markit Small Business Employment Watch
The Paychex | IHS Markit Small Business Employment Watch is released each month by Paychex, Inc., a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small-to medium-sized businesses, and IHS Markit, a world leader in critical information, analytics, and expertise. Focused exclusively on small business, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful tool delivers real-time insights into the small business trends driving the U.S. economy.

About Paychex
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by 45 years of industry expertise, Paychex serves approximately 605,000 payroll clients as of May 31, 2017, across more than 100 locations and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting www.paychex.com, and stay connected on Twitter and LinkedIn.

About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
585-387-6402
[email protected]
@PaychexNews

Kate Smith
IHS Markit
781-301-9311
[email protected]

Tess Flynn
Eric Mower + Associates
716-880-1488
[email protected]

SOURCE Paychex, Inc.