Paychex | IHS Markit Small Business Employment Watch: Small Business Employment Growth Continues to Moderate; Wages on the Rise

ROCHESTER, N.Y., Aug. 1, 2017 /PRNewswire/ -- The latest Paychex | IHS Markit Small Business Employment Watch shows another monthly slowdown in small business job growth, while wages continue to rise at a steady pace. The Small Business Jobs Index dropped to 99.98 in July, 0.70 percent lower than in July 2016. An index level of 100 equates to moderate job gains, represented by the employment growth levels seen during the 2004 base year. National hourly earnings in July were $25.90, an increase of 2.94 percent ($0.74) year-over-year.

"At 99.98, the Small Business Jobs Index slowed for the fifth consecutive month, falling below the national baseline for the first time since 2011," said James Diffley, chief regional economist at IHS Markit.

"Though job growth has continued to moderate following last year's post-election upswing, wage growth is accelerating at a decent pace," said Martin Mucci, Paychex president and CEO. "We're keeping a close eye on the potential impact of minimum wage increases on job growth and hours worked, as well as monitoring the effects of a tightening labor market."

National Jobs Index

• The baseline index level of 100, represented by the employment growth levels seen during the 2004 base year, equates to moderate job gains
• The pace of small business growth is 0.70 percent slower this July compared to last, mirroring June's year-over-year result.
• The Small Business Jobs Index declined 0.52 percent during the past quarter. 

National Wage Report

• After slowing late last year, hourly earnings have accelerated in 2017, with annual growth rising from 2.74 percent in January to 2.94 percent in July.
• With hours worked increasing, weekly earnings are up 3.12 percent over last year.

Regional Jobs Index

• At 100.66, the South remains the strongest region for small business employment growth, but has decreased 0.94 percent during the past four months.
• Down 0.21 percent year-over-year, the Midwest has the best growth rate among regions. The Midwest also has the only positive growth over its base year, up 0.89 percent.

Regional Wage Report  

• Annual wage increases range from 3.70 percent in the West to 2.68 percent in the South.
• Up 2.74 percent year-over-year, the Midwest is the only region to not see an acceleration in hourly earnings growth as it has been relatively flat since April.

State Jobs Index

• Washington had the only sizable gain in July among states, after declining nine consecutive months. The state continues to show the weakest year-over-year growth, -3.28 percent.
• Tennessee remains the top state for small business job growth with the highest 12-month growth rate, 1.48 percent above last year.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

• With a recent and sizable minimum wage increase in Arizona, hourly earnings are up 5.12 percent year-over-year, far outpacing the second- ranked state, California, at 3.78 percent.
• Weekly hours worked decreased the furthest among states in Arizona, down 0.56 percent from last year.
• Washington is ranked first among states in annual gains for weekly hours and earnings.

Note: Analysis is provided for the 20 largest states based on U.S. population

Metropolitan Jobs Index  

• Though still 0.75 percent below its base-year level, Houston improved for the seventh time in the last eight months to 99.70. With energy markets strengthening, the metro continues to recover from the record low set in November 2016 (96.14).
• At 101.19, Philadelphia is up 0.96 percent from last July. The Philadelphia index ranks third among metros in July and has the best 12-month growth rate.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

• Both below two percent, St. Louis and Philadelphia have the weakest hourly earnings annual growth among metros.
• Nearing five percent, Phoenix, followed closely by Riverside, lead hourly earnings growth among metros. Phoenix and Riverside diverge in weekly earnings growth, however, as employees in Phoenix are working fewer hours than last year, while Riverside employees have seen an increase in hours worked.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

• Leisure and Hospitality had the worst one-month and three-month growth rates among industries. Yet, at 100.02, it remains well ahead of its base-year index level.
• At 100.29, Construction edged Education and Health Services (100.28) for second place among metros.

Note: Analysis is provided for seven major industry sectors.

Industry Wage Report  

• Leisure and Hospitality is exhibiting strong year-over-year growth in all three wage components; combining hours worked and pay rate, weekly earnings are up 4.95 percent, the best among industry sectors.
• On the other hand, Education and Health Services is lagging in both hourly earnings and weekly hours growth, as weekly earnings are up just 2.70 percent from last July.

Note: Analysis is provided for seven major industry sectors.

For more information about the Paychex | IHS Markit Small Business Employment Watch, including interactive charts detailing all data at a national, regional, state, metro, and industry level, visit https://www.paychex.com/employment-watch/ and sign up to receive monthly Employment Watch alerts.

*Information regarding the professions included in the industry data can be found at the Bureau of Labor Statistics website.

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. (NASDAQ: PAYX) 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. Learn more about Paychex by visiting www.paychex.com, and stay connected on Twitter and LinkedIn.

About IHS Markit (www.ihsmarkit.com)
IHS Markit (NASDAQ: INFO) is a world leader in critical information, analytics and expertise 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 key business and government customers, including 85 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2017 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
585-387-6402
lfleming@paychex.com 
@PaychexNews

Kate Smith
IHS Markit
781-301-9311
Katherine.smith@ihsmarkit.com

Tess Alberts
Eric Mower + Associates
716-880-1488
talberts@mower.com

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SOURCE Paychex, Inc.