The rate of small business job growth was unchanged from April for the month of May, according to the latest Paychex | IHS Markit Small Business Employment Watch. The national Small Business Jobs Index — which measures the rate of small business job growth in the U.S. — stands at 99.45, a 0.04% decrease from April. Meanwhile, hourly earnings growth for U.S. workers slowed to 4.33%.
“Hourly earnings gains continue to decelerate while the small business job market has been stable in 2023,” said James Diffley, chief regional economist, S&P Global Market Intelligence.
“Despite the challenges of a competitive labor market and tightening credit, our data suggests small businesses remain resilient as job growth holds steady,” said John Gibson, Paychex president and CEO. “Our data also shows a consistent trend of hourly earnings growth slowing over 11 of the past 12 months, perhaps providing some relief for businesses looking to hire.”
In further detail, the May report showed:
- At 99.45, small business employment growth is 1.41% lower compared to a year ago (100.87).
- Wage growth continues to fall nationally, with hourly (4.33%) and weekly earnings growth (3.96%) both dropping in May.
- The South leads small business employment growth among regions for the 14th consecutive month at 100.47.
- North Carolina leads job growth among states for the 11th consecutive month at 101.48.
- Texas ranks first among states for both hourly (5.46%) and weekly earnings growth (4.99%).
- Houston is once again the top metro for small business job growth for the seventh straight month. Houston also ranks first among metros for hourly earnings growth (5.34 percent) in May.
- Construction is the top sector for all three wage data components: hourly earnings growth (4.89%), weekly earnings growth (5.00%), and weekly hours worked growth (0.35%).
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.
National Jobs Index
- After increasing each of the first three months in 2023, the national index slowed 0.24% in April and moderated 0.04% in May to 99.45.
- At 99.45, small business employment growth is 1.41% lower compared to a year ago (100.87).
National Wage Report
- The steady deceleration in hourly earnings growth continues in May, with the rate slowing to 4.33%.
- Weekly earnings growth is now below 4.00% (3.96%), while one- and three-month annualized growth are 2.42% and 2.40%, respectively.
- Year-over-year weekly hours-worked growth continues its moderation, falling to -0.36% in May.
Regional Jobs Index
- At 100.47, the South leads small business employment growth among regions for the 14th consecutive month.
- All regions have slowed from a year ago, with the Northeast and West both decreasing more than two percent year-over-year.
- At 98.86, the West has the weakest job growth rate among regions — a title it has held since November 2022. However, it is the only region to improve in May (0.14%).
Regional Wage Report
- At 4.52%, the South leads hourly earnings growth among regions for the 10th consecutive month. The West (4.49%) and Midwest (4.40%) trail closely behind.
- The Northeast ranks last among regions for hourly earnings growth (4.26%) and is the only region with one-month annualized growth below four percent (3.28%).
- Weekly hours worked growth is negative for all regions, with the West the lowest (-0.69%).
State Jobs Index
- At 101.48, North Carolina leads job growth among states for the 11th consecutive month.
- The top three state indexes (North Carolina, Georgia, Texas) had the weakest one-month change rates.
- Ranked among the bottom three states for all of 2022, Ohio improved for the fifth consecutive month to start 2023 and now ranks 11th among states at 99.64.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- Texas ranks first among states for hourly earnings growth (5.46%) as well as weekly earnings growth (4.99%).
- Indiana ranks last among states for hourly earnings growth (3.82%), but first among states for weekly hours worked growth (0.34%).
- At 4.93% in May, hourly earnings growth slowed below five percent in Florida for the first time since 2021.
- With consistently strong hourly earnings growth above five percent during the past year, Wisconsin has slowly moved up the state rankings to second place in May at 5.18%.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- At 102.23, Houston ranks first among metros for the seventh straight month. Consistently strong, Houston has been above 101 since August 2021.
- Texas metros Houston (-0.49%) and Dallas (-0.87%) had the weakest one-month change rates among metros in May.
- Dallas’ jobs index has slowed 6.21% from a year ago, from 105.33 in May 2022 to 98.80 in May 2023.
- Phoenix (101.23) is up 0.69% from last year, the best 12-month change rate among metros.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- Jumping four spots from April, Houston (5.34%) ranks first among metros for hourly earnings growth in May. Minneapolis (5.14%) and Dallas (5.03%) also have hourly earnings growth above five percent.
- San Francisco ranks last among metros in hourly earnings growth (3.23%) and weekly earnings growth (2.45%).
- Atlanta is in the bottom three metros for hourly earnings growth (3.60%), weekly earnings growth (2.47%), and weekly hours worked growth (-1.02%).
- Baltimore is the top-ranked metro for weekly earnings and hours worked growth, 5.10% and 0.34%, respectively.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- With a modest 0.10% increase in May to 101.39, other services (except public administration) maintains the top spot among sectors.
- At 100.81, education and health services continued its strong pace of small business employment growth in May, moderating just 0.03%.
- Leisure and hospitality remains strong at 100.52 in May, but is 3.38% behind its job growth pace set last year (104.04).
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. The chart’s dark blue bars reflect the index level and the light blue diamonds reflect the 12-month change.
Industry Wage Report
- Construction is the top sector for all three wage data components:
- Hourly earnings growth (4.89%)
- Weekly earnings growth (5.00%)
- Weekly hours worked growth (0.35%)
- Education and health services has the weakest earnings growth among sectors, with hourly earnings growth of 3.69% and weekly earnings growth of 2.92%.
- Hourly earnings growth in leisure and hospitality (4.74%) slipped below five percent for the first time in more than two years. Leisure and hospitality averaged 7.75% hourly earnings growth from April 2021 through April 2023.
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.
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