Hourly earnings growth for workers of U.S. small businesses slowed in September, according to the latest Paychex | IHS Markit Small Business Employment Watch. Hourly earnings growth stood at 4.98 percent in September, falling below 5 percent for the first time since April. The Small Business Job Index, which measures the rate of small business job growth, also slowed slightly from the previous month, down -0.19 percent to 99.75.
“Decreasing for the seventh consecutive month, the jobs index is now below its level from one year ago,” said James Diffley, chief regional economist at IHS Markit.
“With low unemployment levels continuing, small businesses are relying on their current staff to do more, driving an increase hours worked,” said Martin Mucci, Paychex chairman and CEO. “The moderation in hourly earnings growth is of particular note, though, as it may be a sign that the Fed’s actions are possibly having an impact in the battle against inflation.”
In further detail, the September report showed:
- One-month annualized hourly earnings growth fell to 3.35 percent, the weakest growth rate since April 2021.
- Small business employment gains slowed during the spring and summer as monthly decreases averaged -0.26 percent from April through September.
- North Carolina remained the top state for small business job growth; Florida was once again the top state for worker hourly earnings growth (6.47 percent).
- Dallas continues to lead U.S. metros in small business job growth and hourly earnings growth for workers.
- Other services (except public administration) remained the top sector for job growth in September at 102.68.
Note: The other services (except 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.
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 September, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
National Jobs Index
- At 99.75, the national index fell 0.19 percent from last month and 0.21 percent from last year.
- Small business employment gains slowed during the spring and summer as monthly decreases from April through September averaged -0.26 percent.
National Wage Report
- Hourly earnings growth slowed to 4.98 percent in September, falling below 5 percent for the first time since April. One-month annualized hourly earnings growth fell to 3.35 percent, the weakest growth rate since April 2021.
- Jumping to 4.98 percent in September and driven by an increase in hours worked, weekly earnings growth reached a new record level since reporting began in 2011. Nearing 5 percent, weekly earnings growth has increased for seven consecutive months.
Regional Jobs Index
- While all four regions slowed in September, the Northeast (-0.30 percent) fell the furthest.
- The Northeast and the West regional indexes decelerated quickly during the past quarter, falling 1.33 and 1.37 percent since June, respectively.
- For the second month in a row, the South (100.54) is the only region with an index over 100. Its index fell only 0.2 percent in September.
Regional Wage Report
- At 5.49 percent, the South led regions in hourly earnings growth for the sixth consecutive month, while weekly earnings growth reached a new record of 5.35 percent.
- For the fifth straight month, the Northeast was the only region with hourly earnings growth below 5 percent (4.55 percent). However, the Northeast was also the only region where the growth rate did not slow from last month.
- Weekly hours-worked growth in the Northeast improved to 0.06 percent in September, the best showing among regions.
State Jobs Index
- While North Carolina (102.12) had the highest index among states for the third consecutive month, the pace of growth slowed 0.77 percent in September. This decrease makes North Carolina’s growth the third-weakest among states.
- Illinois, Virginia, and Maryland all saw their indexes increase by more than
2 percent year-over-year, with all three coming in over 100 this month. - After ranking last among states from November 2021 through May 2022, Tennessee’s index (100.08) has increased over the past four months.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- Florida ranked first among states for both hourly (6.47 percent) and weekly earnings growth (6.50 percent).
- Texas (6.37 percent), Missouri (6.36 percent), and Indiana (6.11 percent) also had hourly earnings growth above 6 percent in September.
- At 3.61 percent, Virginia was the only state with hourly earnings growth below 4 percent.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Dallas (103.15) and Houston (101.80) topped the metro index in September.
- Washington’s employment growth has been strong during 2022. After spiking 3.04 percent during the last quarter of 2021, the Washington index has averaged 101.19 this year. At 100.96, Washington ranked fourth among metros in September.
- Four west coast metros (San Francisco, San Diego, Seattle, and Riverside) had the weakest indexes among metros, all below 98.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- At 7.44 percent, Dallas led metros in hourly earnings growth for the seventh consecutive month.
- Miami reached new record levels for both hourly and weekly earnings growth (6.77 and 7.14 percent, respectively), ranking second among metros in hourly and first among metros in weekly earnings growth for September.
- At 3.84 percent, Washington ranked last among metros in hourly earnings growth. Regarding dollars per hour, Washington ($38.45) trailed only San Francisco ($39.21).
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- At 102.68, other services (except public administration) remained the top sector in September for the fourth straight month.
- Slowing 0.39 percent in September, leisure and hospitality (100.20) had the weakest one-month change rate among industries for seven of the past eight months.
- Still below 98, financial activities (97.89) was the only sector to improve in September (+0.13 percent).
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The other services (except 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
- In addition to leading in rate of small business job growth, other services led sectors in hourly earnings growth (7.54) in September.
- Construction reached a new record of 5.14 percent hourly earnings growth in September and leads sectors in weekly hours-worked growth (0.38 percent) for the seventh straight month.
- Education and health services ranked last among sectors in hourly earnings growth (4.07 percent), well behind the next weakest sector, financial activities (4.80 percent).
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The other services (except public administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, dry cleaners, and other businesses.
For more information about the Paychex | IHS Markit Small Business Employment Watch, visit www.paychex.com/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.
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