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. At the same time, the leisure and hospitality sector had the strongest hourly earnings growth among industries, gaining 3.79 percent year-over-year.
The Small Business Jobs Index stands at 99.77, down 0.11 percent from January and one percent 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 percent compared to 2.74 percent the previous month. Weekly earnings growth has also slipped below three percent 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, in a written statement.
“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.”
National Jobs Index
- At 99.77, the Paychex | IHS Markit Small Business Jobs Index is down 1.00 percent 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 percent.
- Weekly earnings growth trended above three percent from April to November, but has slipped below three percent 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 percent year-over-year, the West remains the leading region for wage growth.
- Weekly earnings growth in the Midwest peaked at 3.21 percent last February, but has since decelerated, reaching 2.17 percent 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 percent.
- 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 percent, but has slowed to start 2018. One-month and three-month annualized growth rates are both 4.00 percent.
At 3.11 percent, hourly earnings growth in Missouri has improved considerably, following an average of less than two percent growth during the past two years.
Metropolitan Jobs Index
- With the best one-month growth rate among metros, 0.88 percent, 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 percent 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 percent hourly earnings growth, Boston’s deceleration is the most severe, extending back to 2016.