The Paychex | IHS Markit Small Business Employment Watch shows small business job growth declined 1.09 percent year-over-year; Hourly earnings growth rose for the third consecutive month
The Paychex | IHS Markit Small Business Employment Watch for June shows slowing small business job growth accompanied by continued steady wage growth, together indications of an increasingly tight labor market. The national jobs index fell 0.45 percent from the previous month to 98.32 in June. Conversely, with a three-month annualized growth rate near three percent, hourly earnings growth during the past quarter is the strongest since 2017. Hourly earnings growth rose to 2.65 percent ($0.70) in June, while weekly earnings growth fell to 2.02 percent due to a continued decrease in hours worked from a year ago.
“The two-year long, gradual slowing of small business job growth took on a more rapid pace in June with the index declining to 98.32,” said James Diffley, chief regional economist at IHS Markit.
“The jobs index is still reflective of employment growth, though at a slower pace than recent years,” said Martin Mucci, Paychex president and CEO. “With hourly earnings growth increasing, it appears the challenging hiring environment is finally starting to push wage growth higher for small business workers.”
Broken down further by geography and industry, the June report showed:
- The South continues to lead regions in employment growth; the West remains the top region for hourly earnings growth.
- Texas holds the top spot among states for small business job growth; Illinois held its lead among states for wage growth.
- Dallas is again the top metro for job growth; San Diego continues to lead metros for wage growth.
- Falling to 97.75, job growth in Leisure and Hospitality slowed the most in June at 0.85 percent.
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The complete results for June, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available. Highlights are available below.
National Jobs Index
- The national index declined 0.45 from the previous month and is down 1.09 percent from June 2018.
National Wage Report
- Hourly earnings growth rose for the third consecutive month, now 2.65 percent above a year ago.
- With a three-month annualized growth rate of 2.94 percent, hourly earnings growth during the past quarter is the strongest since 2017.
- With weekly hours worked growth negative for the past three quarters, weekly earnings growth slipped further, by 2.02 percent, to a four-year low.
Regional Jobs Index
- Small business job growth declined in all regions in June.
- The Northeast, the weakest region, dropped below 98.
- The South remains the top region for small business employment growth with an index level of 99.30.
Regional Wage Report
- The Midwest and the Northeast saw the largest acceleration in hourly earnings gains in June, though wage growth remains highest in the West.
- Below two percent in the South and the Midwest, weekly earnings growth is significantly lower than hourly earnings growth for all regions.
State Jobs Index
- All 20 states analyzed declined in June, though five (Massachusetts, North Carolina, Pennsylvania, Tennessee, and Virginia) remain positive for the quarter.
- Small business employment growth remains strong in Texas and Tennessee, with indexes over 100.
Note: Analysis is provided for the 20 largest states based on U.S. population.
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State Wage Report
- At 3.97 percent, hourly earnings growth is the fastest in Illinois, and has nearly doubled
- from the 2.05 percent reported last June.
- Neighboring Indiana remained lowest among states, at 0.65 percent hourly earnings growth. Both negative in June, Indiana has the weakest weekly earnings and weekly hours worked growth among states.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Miami led all metros with a 0.25 percent gain in June, yet remains in the middle of the pack for small business employment growth with an index of 98.21.
- Dallas and Tampa are the only metros that remain above 100, with Denver, Atlanta, Phoenix, and Seattle all falling below 100 in June.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- San Diego maintains the highest hourly earnings growth among metros, 4.24 percent, and is the only metro to exceed four percent.
- Representing a majority of the population in the state of Illinois, Chicago’s hourly earnings growth continues to rise rapidly. At 3.89 percent, it ranks second among metros.
- Ranked first among metros with above four percent hourly earnings growth to begin 2019, Riverside has decelerated to below three percent during the first half of the year.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- The pace of small business employment growth decreased for all industry sectors in June.
- Education and Health Services has the strongest one-month, three-month, and 12-month growth rates among industries.
- Falling to 97.75, Leisure and Hospitality slowed the most in June, by 0.85 percent.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.
Industry Wage Report
- At 4.70 percent in June, hourly earnings growth in Leisure and Hospitality continues to accelerate with one-month and three-month annualized rates averaging more than five percent in 2019.
- Ranked last among industries at 1.29 percent, hourly earnings growth in Education and Health Services has stagnated during the past quarter.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.
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