Small business employment has grown consistently during the first quarter of 2023, according to the Paychex | IHS Markit Small Business Employment Watch. The Small Business Jobs Index, which measures employment growth, increased modestly (0.06%) from the previous month to 99.73. The March report also showed average hourly earnings increased slightly from the previous month to 4.64 percent.
“The small business economy continues to demonstrate durability with the jobs index advancing each month this year along with moderate wage gains,” said James Diffley, chief regional economist, S&P Global Market Intelligence.
“The Main Street small- and mid-sized business owners continued to show their resiliency in the first quarter of 2023,” said John Gibson, Paychex CEO. “This is an encouraging start to the year and policymakers are going to need to carefully consider their next actions as the full impact of the recent banking disruptions on SMB’s access to capital is still not fully understood.”
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In further detail, the March report showed:
- Following several months of moderation, national hourly earnings growth increased slightly to 4.64 percent in March as one-month annualized growth reached 5.34 percent.
- The national jobs index has risen for three consecutive months, with the South’s growth—the only region with an index above 100—continuing to lead the country.
- Weekly hours worked rose 0.21 percent YOY (to 32.63) while one-month annualized growth moderated for the first time since August 2022.
- The South led regions for the twelfth consecutive month and is the only region with an index above 100 (100.68). Still, the South reported its first decrease (-0.14 percent) since September 2022.
- Despite its job growth slowing by 0.42 percent, North Carolina’s robust performance continued in March, with the state’s index hitting 102.13.
- Illinois’ growth rate rose 0.25 percent last month and 1.70 percent year-over-year. At 101.92 and second among states, Illinois’ performance in March is the strongest it’s seen since 2014.
- Small business employment growth remained strong in Houston (103.10), making the city the first among metros for the fifth consecutive month.
- Leisure and hospitality led sectors in jobs growth (101.32) and hourly earnings growth (5.96 percent).
Paychex solutions reach 1 in 12 American private-sector employees, making the Small Business Employment Watch an industry benchmark. Drawing from the payroll data of approximately 350,000 Paychex clients with fewer than 50 employees, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity.
The complete results for March, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
National Jobs Index
- At 99.73, the pace of small business employment growth increased 0.06 percent in March and 0.35 percent during the first quarter of 2023.
- Despite consecutive gains in the first three months of 2023, the national Index is down 1.55 percent from a year ago.
National Wage Report
- Following several months of moderation, national hourly earnings growth increased to 4.64 percent in March and one-month annualized growth reached 5.34 percent.
- At 32.63 hours, weekly hours worked were up year-over-year (0.21 percent), though one-month annualized growth dropped (0.03 percent) for the first time since August 2022.
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Regional Jobs Index
- The South led regions for the twelfth consecutive month and is the only region with an index above 100 (100.68). Still, the South reported its first decrease (-0.14 percent) since September 2022.
- At 99.96, the Midwest ranked second among regions—as it has for the past two quarters—and its Index has increased for four consecutive months.
- March brought hints of a narrowing growth gap between regions, as the bottom-ranked West lead the country in gains (0.19 percent) and the top-ranked South lead in losses
(-0.14 percent).
Regional Wage Report
- The South led hourly earnings growth among regions (4.86 percent) for the eighth consecutive month.
- The Midwest ranked last among regions in hourly earnings growth (4.45 percent) and first in weekly hours-worked growth (0.52 percent).
- Hourly earnings growth in the West grew to 4.77 percent in March, as one-month annualized growth jumped to 6.24 percent—its highest level since 2019.
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