Paychex Small Business Jobs Index Jumps in July
On the heels of news that the United States economy grew 6.5% last quarter, the latest Paychex | IHS Markit Small Business Employment Watch report found a sharp increase in small business job growth as well as a significant bump in hourly wages these businesses pay. In July, the Small Business Jobs Index increased by 0.85 points to reach 99.36. This actually marked the second largest single-month jump since 2010. With the latest boost, the index is now up one percentage point from last quarter and up five pecent when compared to this point last year.
Looking at specific areas where small business job growth is occurring, Tampa, Florida and Dallas, Texas each saw index figures above 102 in July. Meanwhile, Atlanta, Georgia also saw a significant increase, climbing 2.28 percent to reach 101.08. In terms of states, Arizona led the way with an index of 101.72 in July. On the other hand, Denver, Colorado was the only metropolis to a decrease in small business jobs, dropping 0.47 percent and hitting 98.70.
With the job market proving competitive for employers, July also brought an increase in wages. During the month, average hourly earnings were $29.42. That marks a growth of 3.11% — which bests the 2.84% growth that came in June. However, due to continued slowing in the number of weekly hours worked, weekly earnings growth was a bit softer, increasing 2.45% in July.
As for the states where wage growth was strongest, Missouri came in first place yet again, making for a three-month streak. Hourly earnings in the Show Me State grew by 4% during the month. Yet, in terms of weekly earnings growth, California won out with a 3.95% increase. Looking at wages regionally, the West had the highest average wage hourly wage at $31.14 followed by the Northeast at $30.58. Wages in the Midwest and South were neck and neck, coming in at $27.65 and $27.69 respectively.
Commenting on July’s results, IHR Markit chief regional economist James Diffley summed them up, saying, “Hiring at small businesses across the U.S. grew significantly in July. The national index jumped to 99.36, the highest level since the summer of 2018.” Elsewhere, Paychex president and CEO Martin Mucci remarked, “The rate of hiring continues to increase steadily across all sector. July’s small business job and wage growth numbers indicate a continued rebound of the economy as employment increases.”
While these latest figures are full of good news, that optimism may be tempered by the current state of the pandemic. With the spread of the Delta variant increasing in many parts of the country, there’s a chance that economic recovery could see a setback. That said, with vaccinations continuing to roll out (albeit at a slower clip than they were earlier this year), local lockdown measures taken last year seem unlikely at this point. Nevertheless, future editions of the Paychex | IHS Markit Small Business Employment Watch may prove to be a bit more complicated as America and its small businesses continue to navigate the ever evolving landscape.