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The Paychex | IHS Markit Small Business Employment Watch for September shows the tight labor market continues to restrain job growth, while hourly earnings wage growth and weekly hours worked saw modest increases. At 99.18, the Small Business Jobs Index is consistent with last month’s level, but slowed 0.23% during the past quarter, and 0.75 since this time last year. The rate of hourly earnings growth in September stands at 2.33% ($0.61), increasing for the first time in more than a year. At 2.65%, weekly earnings growth has slowed during the past year. However, weekly hours worked are up year-over-year for the 22nd consecutive month.
“Small business hiring continues to stall; the Small Business Jobs Index dipped slightly again in September, from 99.22 to 99.18, its lowest since 2010. Demand, however, is now not the problem. The unemployment rate was 9.4% the last time the index was this low,” said James Diffley, chief regional economist at IHS Markit.
“Businesses are continuing to feel the impact of the tight labor market, and as a result, they are nudging wages higher in order to compete for top talent,” said Martin Mucci, Paychex president and CEO. “Our jobs index indicates slower growth among smaller businesses. Trends show a faster growth rate among larger firms, which suggests they have an edge in hiring right now.”
Broken down further by geography and industry, the September report showed:
- The top regions for employment growth and wage growth, respectively, are the South and West.
- Texas ranks highest among states for jobs growth; Arizona ranks first in wage growth.
- Denver remains first among metros in jobs growth; Phoenix regained the lead in wage growth.
- Leisure and Hospitality remains first among industries for hourly earnings growth.
September 2018 Paychex | IHS Markit Small Business Employment Watch
National Jobs Index
- At 99.18, the national index has slowed 0.23% during the past quarter and 0.75 during the past year.
- The national index has fallen by 1.59% since its recent peak in February 2017.
National Wage Report
- Hourly earnings growth posted its first uptick in over a year, increasing to 2.33%.
- Weekly hours worked are up year-over-year for the 22nd consecutive month.
- At 2.65%, weekly earnings growth has slowed during the past year.
Regional Jobs Index
- Down in September and the most year-over-year, the Northeast and Midwest regions drove the September decline and have pulled the national index lower than the other regions during the past year.
- Aided by a steady growth rate in the Pacific and strong improvement in the Mountain division, the West region climbed into second place and is the only region to increase its pace of employment growth in 2018.
Regional Wage Report
- At $28.08 an hour and 3.19% growth, the West continues to far outpace all other regions in hourly earnings growth.
- Weekly earnings growth for the Northeast, South, and Midwest all ranged between 2.40% and 2.50% in September.
State Jobs Index
- Led by a large gain in Dallas, Texas jumped to the top-ranked state with a 0.52% increase in September and an index of 100.70.
- Also showing sluggish wage growth, employment growth in Virginia slowed 2.33% year-over-year to an index level of 98.46, an eight-year low.
State Wage Report
- At 4.05%, Arizona continues to lead state hourly earnings growth, with Tennessee and California trailing at 3.54% and 3.41%, respectively.
- Florida and Georgia have had a strong pick-up in weekly hours worked in the second half of the year.
- Texas, which leads employment growth among states, is struggling with wage growth, which is below 2% in September.
Metropolitan Jobs Index
- At 101.40, employment growth in Denver increased 0.50% during the past quarter as it remained atop the metro rankings, just ahead of a surging Dallas metro.
- Florida metros Tampa and Miami both had solid gains in September.
- With its seventh-straight slowdown, at 97.57, the Philadelphia index dropped to the bottom of the metro rankings – its lowest level since 2011.
Metropolitan Wage Report
- Hourly earnings growth in Houston and Dallas lags other metros, with both below 2% in September.
- After averaging less than 3% in 2017, Denver hourly earnings growth has accelerated in 2018, reaching 3.94% in September.
- Hourly earnings growth in the California metros of San Diego and San Francisco has decelerated to less than 3%.
Industry Jobs Index
- Professional and Business Services had the weakest one-month growth rate, -0.23%, among industry sectors.
- Relatively unchanged during the past quarter, Construction remains in second place among industries with an index just above 100.
Industry Wage Report
- At 3.94% in September, Leisure and Hospitality remains ahead of other sectors for hourly earnings growth.
- The highest-paying sectors, Professional and Business Services and Financial Activities, continue to see wage gains moderate. In September, both industries posted 2.24% hourly earnings growth.
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.
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for payroll, human resources, 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 more than 45 years of industry expertise, Paychex serves over 650,000 payroll clients as of May 31, 2018, 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
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.