In a recent analysis conducted by Paychex | IHS Markit Small Business Employment Watch, small business job growth in the United States showed stability in May, maintaining the same pace as in April. Meanwhile, there has been a noticeable deceleration in the growth of hourly earnings for U.S. workers.
The national Small Business Jobs Index, a metric that gauges small business job growth, recorded a marginal 0.04% dip from April, standing at 99.45. Hourly earnings growth, on the other hand, diminished to 4.33%.
“Hourly earnings gains continue to decelerate while the small business job market has been stable in 2023,” stated James Diffley, chief regional economist, S&P Global Market Intelligence. This pattern of stability in job growth, despite the slowdown in earnings gain, reflects the resilience of small businesses in the face of a competitive labor market and tightening credit conditions.
Echoing this sentiment, John Gibson, Paychex president and CEO, remarked, “Despite the challenges of a competitive labor market and tightening credit, our data suggests small businesses remain resilient as job growth holds steady.” He also highlighted the trend of slowing hourly earnings growth, which has been persistent over 11 of the past 12 months. This could potentially bring relief to businesses that are in the process of hiring.
The May report provided additional insights:
- The Small Business Jobs Index of 99.45 represents a 1.41% dip compared to the same month last year, when the index stood at 100.87.
- Both hourly (4.33%) and weekly earnings growth (3.96%) showed a downtrend in May, reflecting a national decrease in wage growth.
- For 14 consecutive months, the South has spearheaded small business employment growth among all regions, recording an index score of 100.47.
- North Carolina holds the crown for state job growth for the 11th consecutive month, boasting a score of 101.48.
- Texas outpaces all states in terms of both hourly (5.46%) and weekly earnings growth (4.99%).
- Houston continued to lead among metropolitan areas for small business job growth for the seventh month in a row. It also registered the highest growth in hourly earnings (5.34%) in May.
- Among all industry sectors, construction took the lead for all three wage growth components: hourly earnings growth (4.89%), weekly earnings growth (5.00%), and weekly hours worked growth (0.35%).
The data from Paychex is derived from the payroll data of approximately 350,000 clients, each with fewer than 50 employees. With solutions reaching 1 in 12 American private-sector employees, Paychex’s Small Business Employment Watch offers an authoritative snapshot of the national employment and wage trends. This invaluable resource provides insight into the intricacies of the regional, state, metro, and industry sector activity, making it a reliable benchmark for industry performance.
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