Small Business Employment and Wage Growth Show Little Change in October

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The Paychex | IHS Markit Small Business Employment Watch shows a slight slowdown in small business job growth, with wage growth also showing a small decline over the past month. The Small Business Jobs Index stands at 99.89, moderating 0.04% from the previous month. After reaching a milestone three percent growth rate in August, hourly earnings growth has slowed slightly in the past two months. Hourly earnings in October were $26.07, a gain of 2.91% ($0.74) year-over year.

“With a national index level of 99.89, small business job growth continues to moderate, slowing for the eighth consecutive month,” said James Diffley, chief regional economist at IHS Markit.

“While generally stable, the national jobs index dropped slightly in October, undoubtedly impacted to some degree by those communities recently disrupted by natural disasters,” said Martin Mucci, Paychex president and CEO. “In line with last month’s results, we continued to see a slowdown in hours worked in those places recovering from hurricanes in August and September, specifically Houston, Miami, and Tampa.”

October 2017 Paychex | IHS Markit Small Business Employment Watch

National Jobs Index

The national index is just 0.11 below 100, yet this represents the lowest level since September 2011.

Though it’s declined over the past three months, the jobs index has moved just 0.09 percent since July, representing the most stable quarter in the history of the jobs index.  

National Wage Report

Hourly earnings gained 2.91% year-over-year, slowing slightly from recent months. Both well below the annual growth rate, one-month and three-month annualized growth rates were 2.32% and 2.59%, respectively.

At $847.61 in October, weekly earnings growth was up 3.13% from a year ago. While 3.13% is an improvement from the growth rate posted last October (2.73%), the acceleration has slowed in recent months.

Regional Jobs Index

At 100.58, the South was the only region to improve in October, remaining the strongest region for small business employment growth and the top-ranked region for 18 consecutive months.

Declining to 99.49, the West is down a full percentage point from a year ago.

Regional Wage Report 

The West continues to post the fastest weekly earnings growth, 3.68%; it is not accelerating, however, averaging 3.655 since the start of 2016.

Weekly earnings growth in the Midwest is experiencing a deceleration, having declined 0.22% since February, from 3.095 to 2.87%.

State Jobs Index

Following a significant slowdown in recent months, Georgia had the best one-month growth rate among states in October, recovering some of the employment growth momentum it held as 2017 began.

Ranked fourth among states to end 2016, New Jersey has quickly slowed to the 16th-ranked state and is under 100 for the first time since October 2015.

State Wage Report

Affected by a sizable drop in weekly hours, weekly earnings in Florida fell sharply.

Hourly earnings growth in California increased to 3.89%, closing its second-place gap to Arizona.

Each of the large Midwestern states saw declining wage growth in October.

Metropolitan Jobs Index 

Improving 0.48% in October, Denver surged to second place among metros to join Minneapolis as the only other metro index above 101.

Falling more than 2% during the past two months, Dallas fell to the lower half of the metro growth rankings for the first time since 2011.

Metropolitan Wage Report

Likely affected by Hurricane Irma, Miami and Tampa are the two weakest metros for weekly earnings and hours growth in October.

After ranking last in hourly and weekly earnings, as well as weekly hours worked, last October, Houston was surging prior to Hurricane Harvey; earnings continue to trend in a positive direction, slowing slightly, while hours worked have stalled and are near the weakest among metros once again.

Riverside, California ranked first in hourly earnings growth in October, 4.83%, while Chicago was last at 1.785.

Industry Jobs Index

With its fourth consecutive gain, Construction improved to 100.67 in October.

At 98.71, Professional and Business Services declined to the last-ranked industry in October, where Manufacturing had resided for 31 straight months.

Industry Wage Report 

After decelerating during 2016, Construction weekly earnings have trended upward all year, reaching 3.34% year-over-year growth in October.

Hourly earnings growth in Trade, Transportation, and Utilities has improved quickly in 2017, starting at 3.04% in January and currently at 3.91% in October.

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. 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.

About IHS Markit

IHS Markit is a world leader in critical information, analytics and expertise 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 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.