August Job Growth Among Small Businesses Unchanged from July

According to the 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. — is essentially flat at 99.10, a decrease of 0.04% in August. Meanwhile, an hourly earnings growth rate of 3.98% among U.S. small businesses is unchanged in August from July and below four percent for the second consecutive month.

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From July to August, the national Small Business Jobs Index is essentially flat while hourly earnings growth nationally is below four percent for the second-straight month. (Graphic: Business Wire)

“The Small Business Jobs Index moderated for the fifth consecutive month and the flattening of earnings growth both align with a stabilizing U.S. labor market,” said James Diffley, chief regional economist, S&P Global Market Intelligence.

“Our data indicates America’s small businesses are adding workers at a sustained and modest rate,” said John Gibson, Paychex president and CEO. “Regarding hourly earnings, last month we reported a growth rate below four percent for the first time since 2021. Seeing that trend continue this month is an encouraging sign that wages are normalizing along with overall inflation.”

In further detail, the August report shows:

• The pace of small business job growth has changed over the past year from 99.94 in August 2022 to 99.10 in August 2023.
• Despite slowing for the sixth consecutive month, North Carolina is once again the top-ranked state for small business job growth (100.69), overtaking Texas (100.46).
• Houston’s jobs index (102.06) ranks first among metros in August and is more than a point higher than second-ranked Miami (100.82).
• Hourly earnings growth was unchanged at 3.98% in August, though one-month annualized growth increased to 4.71%.
• Weekly hours worked growth has slowed in recent months and is down 0.45% year-over-year.
• At 99.71, the South leads regional small business job growth for the 17^th consecutive month despite slowing each month since February 2023.
• Only four states have increased their pace of job growth from a year ago, with Wisconsin leading the way, gaining 1.77% from last August to 99.53.
• At its 2023 peak, Washington leads states in hourly earnings growth (4.87%). However, weekly hours worked growth in Washington continues to rank last among states and has been negative for the past two years.
• While the lowest performing sector among industries, Manufacturing (97.24) showed the most significant gains in August (0.21%).

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.