The Paychex | IHS Markit Small Business Employment Watch shows small business job growth stayed consistent with the previous month and hourly earnings growth increased slightly
Dateline:
Rochester, N.Y. (March 5, 2019) – 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 percent year-over-year. Hourly earnings growth improved once again from the previous month, up 2.50 percent ($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 percent).
The complete results for February, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch . Highlights are available below.
February 2019 Paychex | IHS Markit Small Business Employment Watch
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 percent from last year.
- Hourly earnings growth edged back up to 2.50 percent, continuing its gradual acceleration from 2.28 percent 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.
- At 99.59, the South regained the lead among regions with a 0.18 percent 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 percent in February and is above 101.
- The Northeast continues to lag all regions, remaining below 98 and down 1.80 percent year-over-year.
Note: Percentages displayed in the regional heat map reflect 12-month changes.
Regional Wage Report
- The West remains the leading region for hourly earnings growth, up 3.25 percent from a year ago.
- At 2.38 percent in February, hourly earnings growth in the Midwest has been consistent during the past six months, ranking second among regions and averaging 2.37 percent.
- 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 percent year-over-year and ranked last among states for small business employment growth.
Note: Analysis is provided for the 20 largest states based on U.S. population. The chart’s dark blue bars reflect the index level and the light blue diamonds reflect the 12-month change.
State Wage Report
- California, New York, and Arizona are the only states with hourly earnings growth above three percent.
- Indiana has the weakest hourly earnings growth among states, with an ongoing year-long deceleration to less than one percent.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Reaching 103.32 in February, the Dallas index now exceeds all metros by more than two percent, with Phoenix, Tampa, and Denver also above 100.
- Boston remained the weakest metro in February, dropping below 97 to its lowest index level since 2010.
Note: As of February 2019, Baltimore replaced St. Louis on the Small Business Employment Watch analysis of the 20 largest metro areas based on U.S. population. The chart’s dark blue bars reflect the index level and the light blue diamonds reflect the 12-month change.
Metropolitan Wage Report
- The Southwestern metros of Riverside, Phoenix, and San Diego lead hourly earnings growth; Denver also joins them at rates above 3.75 percent.
- Though Houston ranks last among metros for the seventh consecutive month, at 1.31 percent in February, its hourly earnings growth rate has steadily improved since October.
Note: As of February 2019, Baltimore replaced St. Louis on the Small Business Employment Watch analysis of the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Though below 99 and close to the national average, Leisure and Hospitality has had the most improved hiring activity in recent months, up 0.44 percent during the past quarter.
- At 97.75, the Financial Activities sector is one of the weakest industries for small business employment growth.
Industry Wage Report
- Leisure and Hospitality has the fastest hourly earnings growth among industry sectors (4.23 percent), though its weekly hours worked growth ranks last at -1.12 percent.
- At 1.77 percent, Education and Health Services slipped to last place among industry sectors for hourly earnings growth, slowing from 2.39 percent last February.
