Paychex | IHS Markit Small Business Employment Watch: Jobs and Wage Growth Slow in July

ROCHESTER, N.Y., July 31, 2018 /PRNewswire/ -- The Paychex | IHS Markit Small Business Employment Watch for July shows slight declines in the rates of small business jobs and wage growth. At 99.34 in July, the Small Business Jobs Index is down 0.63 percent year-over-year. Hourly earnings growth stands at 2.42 percent, up $0.63 from a year ago. Since last July, hourly earnings growth has slowed 0.54 percent.

"The Small Business Jobs Index slipped slightly again in July, to 99.34. It has been on a steady downtrend for the past 18 months, falling 1.43 percent during that time, while large employers have expanded payrolls," said James Diffley, chief regional economist at IHS Markit.

"We continue to see declining wage growth, which is unexpected in such a tight labor market," said Martin Mucci, Paychex president and CEO. "We recently surveyed business owners to look into this further. Of those who don't plan to raise wages this year, the majority (65 percent) indicated they're not making enough profit to do so, others are choosing to invest in other aspects of their business (28 percent)." 

National Jobs Index

• The national index continued its slow decline, down 0.19 percent during the past quarter and 0.63 percent during the past year.
• Reflecting tightening labor markets, the 12-month change in the index has been negative since March 2017.

National Wage Report

• Wage gains continued what is now a year-long slide for both the hourly and weekly earnings measures.
• Since last July, weekly earnings growth has slowed from 3.10 percent to 2.65 percent, and hourly earnings growth has slowed from 2.96 percent to 2.42 percent.

 Regional Jobs Index

• With an index below 99, the Northeast is the weakest region for small business employment growth.
• The South has been the strongest region for more than two years, but its employment growth has slowed the most year-over-year, 0.79 percent.

Regional Wage Report  

• The Midwest was the only region to see an increase in weekly earnings growth in July, albeit a very slight 0.01 percent increase.
• The earnings gap between regions is widening as the region with the lowest wage, the Midwest, also has the weakest growth rate. Conversely, the region with the highest wage, the West, also has the strongest growth rate.

State Jobs Index

• With its fourth consecutive increase, Arizona surged to become the top-ranked state. At 100.91, Arizona's employment growth increased 0.72 percent in July and 1.43 percent year-over-year.
• Michigan continued its recent surge with its third consecutive large gain, improving to 100.74. Meanwhile, Michigan's neighbor to the south, Indiana, at 98.51, fell to last place among states and is at its lowest level in nearly eight years.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

• Only three of the 20 most populous U.S. states have hourly earnings growth exceeding 3 percent - Arizona, California, and Tennessee.
• Arizona, which now leads states in employment growth, per the Paychex | IHS Small Business Jobs Index, also continues to lead states in wage growth. 

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index  

• At 101.14 and gaining more than 2 percent since March, Phoenix jumped to the top of the employment growth metro rankings.
• Los Angeles was unchanged in July and remains the only metro below 98. Nevertheless, all other metros in California improved in July.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

• Hourly earnings growth is accelerating in Denver. Averaging less than 3 percent growth during 2017, Denver's hourly earnings growth is averaging 3.58 percent in 2018 and is up 3.85 percent in July.
• At $23.80, Riverside, CA has the lowest hourly earnings among metros, but is experiencing strong growth, 4.42 percent in July. Additionally, one-month and three-month annualized growth rates are over 5 percent.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

• Down 1.32 percent year-over-year, Leisure and Hospitality has dropped from above 100 in July 2017 to below 99 this July.
• With its tenth decrease during the past 12 months, Other Services (except Public Administration) has slowed 2.70 percent, worst among industry sectors.

Note: Analysis is provided for seven major industry sectors.

Industry Wage Report  

• At 3.02 percent in July, Construction continues to show very steady hourly earnings growth, averaging just above 3 percent during the past two years.
• Hourly earnings growth in the Other Services (except Public Administration) sector has dropped off quickly in 2018. Ranked first among industries in December 2017 (4.17 percent), Other Services now ranks last at 1.78 percent.

Note: Analysis is provided for seven major industry sectors.

For more information about the Paychex | IHS Markit Small Business Employment Watch, including interactive charts detailing all data at a national, regional, state, metro, and industry level, visit www.paychex.com/employment-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.

About the Paychex | IHS Markit Small Business Employment Watch
The Paychex | IHS Markit Small Business Employment Watch is released each month by Paychex, Inc., a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small-to medium-sized businesses, and IHS Markit, a world leader in critical information, analytics, and expertise. Focused exclusively on small business, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful tool delivers real-time insights into the small business trends driving the U.S. economy.

About Paychex
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for payroll, human resources, retirement, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by more than 45 years of industry expertise, Paychex serves over 650,000 payroll clients as of May 31, 2018, across more than 100 locations in the U.S. and Europe, and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting www.paychex.com, and stay connected on Twitter and LinkedIn.

About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
585-387-6402
[email protected] 
@PaychexNews

Kate Smith
IHS Markit
781-301-9311
[email protected] 

Tess Flynn
Eric Mower + Associates
716-880-1488
[email protected]

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SOURCE Paychex, Inc.