Following April Surge, Small Business Job Growth Holds Pace in May
The Paychex | IHS Markit Small Business Employment Watch for May reveals that the Small Business Jobs Index moderated slightly, with a 0.07% month-over-month slowdown. Job growth remains steady, but overall growth is hindered by labor shortages and construction industry declines.
While the national index is up 4.58% over the past quarter, construction jobs dropped 1.78%. Conversely, the leisure and hospitality sector gained 1.94% in May and shows a 12.40% increase over the past quarter.
- National index increased by 4.58% over the past quarter.
- Leisure and hospitality sector saw a 1.94% job gain in May, with a 12.40% increase over the past quarter.
- Small Business Jobs Index moderated by 0.07% month over month.
- Construction industry experienced a job decline of 1.78% in May due to high material costs and shortages.
ROCHESTER, N.Y., June 1, 2021 /PRNewswire/ -- The rate of job growth was largely unchanged in May, according to aggregated payroll data of approximately 350,000 clients provided by Paychex. The data released in the May report of the Paychex | IHS Markit Small Business Employment Watch shows the Small Business Jobs Index moderated slightly, slowing 0.07 percent month over month. Hourly and weekly earnings growth fell below three percent in May, driven by part-time workers with lower wages returning to the workforce.
"The Small Business Jobs Index did not show significant growth—holding steady in May," said James Diffley, chief regional economist at IHS Markit. "Small businesses are struggling to return to normal operations and expand due to labor shortages."
"In addition to the hiring challenges seen nationally, job growth declines in the construction industry impacted the positive momentum of the past few months. The high cost and low availability of materials drove job growth in construction down 1.78 percent in May," said Martin Mucci, Paychex president and CEO. "At the same time, with more people dining out and travel increasing across the U.S., job growth in the leisure and hospitality industry is rebounding significantly, and wages are too."
In further detail, the May report showed:
- The national index is up 4.58 percent during the past quarter, driven largely by the lower employment comparison level last year.
- Job growth in the construction industry slowed sizably in May, down 1.78 percent.
- Leisure and hospitality continued their comeback, gaining 1.94 percent in May and 12.40 percent during the past quarter.
- The South continues to lead all regions in small business job growth.
- Texas once again takes the top ranking for job growth among states.
- Tampa leads metros in small business job growth.
Paychex business solutions reach 1 in 12 American private-sector employees, making the Small Business Jobs Index report an industry benchmark. The national jobs index uses a 12-month same-store methodology to gauge small business employment trends on a national, regional, state, metro, and industry basis.
The complete results for May, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
National Jobs Index
- The national index moderated slightly in May, slowing 0.07 percent to 98.27.
- The national index is up 4.58 percent during the past quarter, driven in large part by the lower employment comparison level last year.
- The national index has returned to pre-pandemic levels, though early 2020 levels indicated small business job growth had declined since 2017.
National Wage Report
- With lower wage and part-time workers returning to the workforce, hourly and weekly earnings growth has slowed in 2021.
- Hourly and weekly earnings growth slipped to below three percent in May.
- Weekly hours worked growth slowed to 0.09 percent but remains positive year-over-year.
Regional Jobs Index
- The South remained the strongest region for small business job growth, more than one point above the national index level.
- The West improved for the third consecutive month and was the only region with positive gains in May. The West overtook the Midwest for second place among regions, the first time the area has ranked this high since 2019.
Regional Wage Report
- The Midwest has seen continued wage declines, while the West has gained, perhaps reflecting different degrees of re-opening.
- The West and Northeast both saw hourly earnings growth above three percent in May.
- Weekly hours worked in the Northeast are down 0.69 percent from last year, largely due to a higher percentage of part-time employees displaced during the height of business shutdowns last year.
State Jobs Index
- Led by Texas, six states have an index level above 100 in May.
- Washington ranks last among states for the eleventh consecutive month at 94.73.
- North Carolina jumped five spots in April to land among the top five states for small business employment growth. The state held its position in May with another solid gain (0.61 percent).
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- Missouri (3.92 percent) led states in hourly earnings growth in May, followed by New Jersey (3.65 percent) and Massachusetts (3.50 percent).
- Georgia and California have the strongest weekly earnings growth among states, both above four percent. Illinois ranks last and is the only state with weekly earnings growth below two percent.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Tampa continued to lead all metros at 102.13, despite a 0.61 percent decrease in May.
- The top eight metros all slowed from April to May.
- Washington is the only metro with an index that's lower than its May 2020 level.
- Dallas slowed nearly one percent in May but remains firmly in second place among metros at 101.16.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- Riverside, CA is the only metro with hourly earnings growth above four percent and the only metro with weekly earnings growth above five percent.
- Weekly hours worked are up 2.13 percent from last year in Seattle, best among metros. Despite hourly earnings growth below two percent, weekly earnings growth topped four percent in May, aided by the boost in hours worked.
- Five metros have hourly earnings below two percent (Baltimore, Houston, Dallas, Chicago, and Seattle).
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Construction slowed sizably in May, down 1.78 percent, perhaps reflecting supply bottlenecks in a robust building environment.
- Leisure and hospitality industries continued their strong comeback, gaining 1.94 percent in May and 12.40 percent during the past quarter. Leisure and hospitality was the only sector to see gains in May.
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
- Wage rates in leisure and hospitality are increasing significantly, with weekly earnings growth up 9.35 percent. The next strongest sector is construction, up just 3.79 percent.
- Hourly earnings growth is below three percent in all but two sectors, leisure and hospitality and trade, transportation, and utilities.
- Earnings and hours worked have steadied in manufacturing.
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.
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.
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, benefits, human resources, 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 served more than 680,000 payroll clients as of May 31, 2020 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 paychex.com and stay connected on Twitter and LinkedIn.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: 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 © 2021 IHS Markit Ltd. All rights reserved.
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