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Small Business Job Growth and Wages Moderate in February
March 6, 2018 | IHS MarkitEstimated reading time: 4 minutes
After an uptick to start the year, the Paychex | IHS Markit Small Business Employment Watch saw small declines in jobs and wage growth in February. The Small Business Jobs Index stands at 99.77, down 0.11% from January and one% below last year. The index has been below 100 since July 2017. Hourly earnings increased $0.69 in the past year to $26.41, but February’s 12-month growth rate fell to 2.67% compared to 2.74% the previous month. Weekly earnings growth has also slipped below three% during the past quarter.
“After a prolonged downturn, the Paychex | IHS Markit Small Business Jobs Index has stabilized at just below 100, a marginal decline in small business dynamism from a decade and a half ago,” said James Diffley, chief regional economist at IHS Markit.
“The results of the Small Business Jobs Index over the past year are evidence of the tightening labor market,” said Martin Mucci, Paychex president and CEO. “As the growth in jobs stabilizes because of challenges in finding qualified employees, we expect to see business owners making positive changes to wages and benefits to recruit and retain top quality talent.”
February 2018 Paychex | IHS Markit Small Business Employment Watch
National Jobs Index
At 99.77, the Paychex | IHS Markit Small Business Jobs Index is down 1.00% from last year.
February marks the eighth consecutive month the national index has been below 100.
National Wage Report
Hourly earnings growth turned lower in February, decelerating to 2.67%.
Weekly earnings growth trended above three% from April to November, but has slipped below three% during the past quarter.
Weekly hours have seen positive growth year-over-year for 15 straight months.
Regional Jobs Index
At 100.34, the South ranks first among regions for the 22nd consecutive month and is the only region above 100.
The Northeast ranks third among regions, but has the best one-month and 12-month growth rates.
Regional Wage Report
Averaging $27.52/hour and up 3.23% year-over-year, the West remains the leading region for wage growth.
Weekly earnings growth in the Midwest peaked at 3.21% last February, but has since decelerated, reaching 2.17% this February.
State Jobs Index
At 102.36, Washington regained its position as the top state for small business employment growth, with a healthy February gain of 0.65%.
On the East Coast, at 100.56, North Carolina improved sizably for the third straight month and jumped to fourth place among states.
Sixteen of 20 states have a negative 12-month growth rate as the tightening small business labor market is widespread among states.
State Wage Report
Arizona remains the top state for hourly earnings growth, 4.67%, but has slowed to start 2018. One-month and three-month annualized growth rates are both 4.00%.
At 3.11%, hourly earnings growth in Missouri has improved considerably, following an average of less than two% growth during the past two years.
Metropolitan Jobs Index
With the best one-month growth rate among metros, 0.88%, Seattle displaced Denver as the top-ranked metro for small business employment growth.
Among the slowest-growing metros, San Francisco (98.44) gained 0.65% in February, switching places with Los Angeles (97.60). Los Angeles now ranks last among metros for the first time in the history of the Small Business Jobs Index.
Metropolitan Wage Report
The Western metros continue to far outpace the rest of the country for earnings growth.
At 1.55% hourly earnings growth, Boston’s deceleration is the most severe, extending back to 2016.
Industry Jobs Index
At 100.38, Construction is up for the quarter and has been above 100 for the past six years, signifying steady small business employment growth.
Financial Activities had its worst month in more than ten years, decreasing 0.60% and falling to the slowest-growing industry sector.
Industry Wage Report
Leisure and Hospitality has the strongest hourly earnings growth among industries, gaining 3.79% year-over-year.
While most sectors are slowing, wage gains in Construction and Financial Activities are accelerating.
Pairing solid hourly earnings and weekly hours worked growth, Trade, Transportation, and Utilities has the best wage growth among sectors, 4.06%.
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. For more information, click here.
About IHS Markit
IHS Markit 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.
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