Small Business Hiring Growth Improves for Third Consecutive Month

ROCHESTER, N.Y., March 3, 2020 /PRNewswire/ -- The latest Paychex | IHS Markit Small Business Employment Watch shows an upturn in the pace of small business job growth for the third straight month, a trend last seen in early 2017. Though down 0.61 percent from last year, employment growth increased 0.15 percent from the previous month, and 0.22 percent in the past quarter, to 98.32. Hourly earnings growth dipped to 2.74 percent in February. Weekly hours worked also fell for the second consecutive month but remain up 0.41 percent from a year ago.

Note: Findings are reflective of data through Wednesday, February 19, the cutoff date for the monthly Small Business Employment Watch.

"The national jobs index has turned upward as three monthly increases have recovered the ground lost since June of last year. Wage growth, however, peaked late in 2019 and has begun to decelerate in 2020," said James Diffley, chief regional economist at IHS Markit.

"The past three months mark the longest string of job growth increases in nearly three years, indicating a positive start for small business hiring in 2020," said Martin Mucci, Paychex president and CEO. "However, these results have yet to reflect any impact from cases of the COVID-19 (coronavirus), which are expected to increase in the coming months."

Broken down further, the February report shows:

• The South remains the leading region for small business employment growth; the West continues as the top region for hourly earnings growth.
• Tennessee continues to lead states in small business job growth; California leads in hourly earnings growth.  
• Philadelphia became the top metro for small business job growth; Los Angeles ranks first among metros in hourly earnings growth.
• Small business hiring growth is widespread, with all industry sectors showing employment gains during the past quarter.

The complete results for February, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch. Highlights are available below.                                                         

National Jobs Index

• At 98.32, the Paychex | IHS Markit Small Business Jobs Index is up 0.15 percent from the previous month.
• The pace of small business employment growth improved for the third straight month, a trend last seen in early 2017.

National Wage Report

• Hourly earnings growth slowed to 2.74 percent from a year ago, continuing to soften after reaching three percent in November.
• Although up 0.41 percent from a year ago, weekly hours worked growth slowed for the second consecutive month.

Regional Jobs Index

• Strong job gains in Construction continue to help the South remain the top region for small business employment growth, with an index above 99.
• The Northeast, which increased 0.30 percent in February, remains the only region with positive year-over-year gains (0.46 percent), driven by hiring growth in Leisure and Hospitality and Manufacturing.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

Regional Wage Report 

• Hourly earnings growth is the strongest in the West at 3.25 percent, followed by the Northeast at 2.97 percent.
• The South is the weakest region for wage and hours worked growth; the growth rate of weekly hours worked has quickly fallen from 1.15 percent in December 2019 to -0.13 percent in February 2020.
• Weekly earnings growth in the Northeast ended 2019 over four percent, but has fallen below three percent two months into 2020.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

State Jobs Index

• Despite slowing to 100.49 in February, Tennessee has been the top-ranked state for seven months.
• With its sixth increase in seven months, the Florida index has climbed to 99.81, ranking second among states.

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

State Wage Report

• California and New York lead states in hourly earnings growth, 3.55 percent and 3.48 percent respectively, though both have slowed to start 2020.
• With hourly earnings growth ahead of only Texas, Wisconsin dropped to 1.31 percent growth from a year ago.
• Only five states have weekly earnings growth over three percent in February, down from 13 states in January.

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

Metropolitan Jobs Index 

• Philadelphia has surged 2.76 percent since last year and is now the top-ranked metro for small business jobs growth at 99.88.
• The bottom seven ranked metros all improved their pace of employment growth in February.
• Though still showing job gains with an index level slightly below 99, Dallas has quickly decelerated, down 3.75 percent since July.

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

Metropolitan Wage Report

• Hourly earnings growth in Baltimore has accelerated dramatically since the second half of 2019 and now ranks third among metros at 3.54 percent.
• The California metros of Los Angeles and San Francisco lead hourly earnings growth, while the Texas metros of Dallas and Houston rank the lowest.

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

Industry Jobs Index

• All sectors show hiring gains during the past quarter.
• Leisure and Hospitality and Trade, Transportation, and Utilities had the largest increases in February, rebounding from a downturn in 2019.
• Experiencing a five-month upswing, Financial Activities is the only sector with positive year-over-year job gains (0.18 percent).

Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.

Industry Wage Report  

• With just under five percent hourly and weekly earnings growth, Leisure and Hospitality continues to lead among industry sectors. However, weekly hours worked growth in Leisure and Hospitality is negative year-over-year.
• At 1.56 percent, Education and Health Services trails all other industries in hourly earnings growth.

Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.

For more information about the Paychex | IHS Markit Small Business Employment Watch, 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 human resources, payroll, benefits, 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 more than 45 years of industry expertise, Paychex serves approximately 670,000 payroll clients as of May 31, 2019 across more than 100 locations in the U.S. and Europe, 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 (NYSE: 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 © 2020 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
+1 585-387-6402
[email protected] 
@PaychexNews 

Kate Smith
IHS Markit
+1 781-301-9311
[email protected] 

Tess Flynn
Mower
+1 716-880-1488
[email protected] 

SOURCE Paychex, Inc.

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