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The Paychex | IHS Markit Small Business Employment Watch continued to reflect signs of the tight labor market. At 98.93, the Small Business Jobs Index was unchanged in February, remaining just below 99. Though the rate of job growth has stayed relatively consistent over the past three months, the national index is down 0.84% year-over-year. Hourly earnings growth improved once again from the previous month, up 2.50% ($0.66). One-month and three-month annualized growth rates for weekly hours worked were positive in February. As a result, weekly earnings growth also increased for the first time since last summer.
“Small business job growth remains weak in this very low unemployment economy,” said James Diffley, chief regional economist at IHS Markit.
“Businesses continue to face challenging hiring conditions due to the tight labor market,” said Martin Mucci, Paychex president and CEO. “Our latest survey of business owners reinforces this—it shows the ability to fill open positions with qualified candidates continues to be a challenge."
Broken down further by geography and industry, the February report showed:
- The South regained the lead among regions for employment growth; the West remains the leading region for hourly earnings growth.
- Texas regained its position as the strongest state for small business job growth; California is once again the top state for wage growth.
- Dallas remains first among metros in job growth; Riverside, California remains the top metro for wage growth.
- Leisure and Hospitality has the fastest hourly earnings growth among industry sectors (4.23%).
Highlights are available below.
National Jobs Index
- The national index was unchanged in February, remaining just below 99 for the third straight month.
- At 98.93, the national index is down 0.84% from last year.
National Wage Report
- Hourly earnings growth edged back up to 2.50%, continuing its gradual acceleration from 2.28% in August.
- Weekly earnings growth finally increased after a consistent slowdown since last summer.
- Though still negative from last year, one-month and three-month annualized growth rates are positive for weekly hours worked in February.
Regional Jobs Index
- At 99.59, the South regained the lead among regions with a 0.18% increase in February. Drilling down to the division level in the South, job gains accelerated in the West South Central as its index gained more than one% in February and is above 101.
- The Northeast continues to lag all regions, remaining below 98 and down 1.80% year-over-year.
Regional Wage Report
- The West remains the leading region for hourly earnings growth, up 3.25% from a year ago.
- At 2.38% in February, hourly earnings growth in the Midwest has been consistent during the past six months, ranking second among regions and averaging 2.37%.
State Jobs Index
- Texas surged to regain its position as the top state with its best one-month gain in more than six years and an index exceeding 101.
- Below 98 for the fourth straight month, Massachusetts is down 2.43% year-over-year and ranked last among states for small business employment growth.