Following December Decline, Small Business Employment Growth Holds Steady in January
The latest Paychex | IHS Markit Business Employment Watch report reveals the national Small Business Jobs Index slightly decreased to 94.00, down 0.07% from December. Job growth stabilized with increases in earnings and hours worked, reversing a six-month slowdown. Hourly earnings grew by 2.68% while weekly earnings rose by 2.84%. The construction sector led job growth with a 0.34% increase, while leisure and hospitality faced a 0.63% decline. Five out of eight sectors reported job increases, with notable growth in California.
- Hourly earnings growth increased to 2.68%.
- Weekly earnings growth rose to 2.84%.
- Job growth in the construction industry increased by 0.34%.
- Five out of eight industry sectors experienced job growth.
- Small Business Jobs Index down 0.07% from December.
- Overall index down 4.25 from January 2020.
- Leisure and hospitality sector saw a 0.63% decline.
ROCHESTER, N.Y., Feb. 2, 2021 /PRNewswire/ -- The latest Paychex | IHS Markit Business Employment Watch report is out. The January numbers show the national Small Business Jobs Index held relatively stable from the previous month, moderating slightly to 94.00 or 0.07 percent. Both the growth in earnings and hours worked are trending higher to begin the year following a six-month slowdown. Hourly earnings growth increased to 2.68 percent. Weekly earnings growth also increased to 2.84 percent as weekly hours worked rose 0.17 percent.
"After December's decline, the Small Business Jobs Index remained relatively flat in January," said James Diffley, chief regional economist at IHS Markit.
"Led by a strong showing in construction, most industries experienced gains in January. This helped stabilize employment growth to begin the year," said Martin Mucci, Paychex president and CEO. "The new round of Paycheck Protection Program loans will be especially important to businesses negatively impacted by COVID-19. Especially those in the hospitality sector where the maximum loan amount has been increased."
The monthly report, widely considered an industry benchmark, draws payroll data of approximately 350,000 Paychex clients to gauge small business wage and employment trends on a national, regional, state, metro, and industry basis.
In further detail, the January report showed:
- Five of the eight industry sectors analyzed experienced job growth in January.
- Losses were concentrated in leisure and hospitality, which declined 0.63 percent from the previous month.
- Job growth was most robust in the construction industry, which increased 0.34 percent.
- California climbed four spots in the state rankings, spurred by the construction industry, and saw its best one-month increase in eleven years.
- The South leads in small business job growth, more than a point ahead of all other regions.
- Florida, Texas, and Tennessee are the only states with jobs index levels above 96.
- Following a six-month slowdown, both the growth in earnings and hours worked are trending higher.
- 15 of the 20 states analyzed have positive year-over-year weekly hours worked growth.
The complete results for January, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/watch. Highlights are available below.
Note: Data presented for the month of January was collected between December 18, 2020 and January 21, 2021.
National Jobs Index
- At 94.00, the Small Business Jobs Index moderated slightly from the previous month, down 0.07 percent.
- The national index is down 4.25 from January 2020.
National Wage Report
- Both earnings and hours worked growth are moving higher to begin 2021 following a six-month slowdown.
- Hourly earnings growth increased in January to 2.68 percent.
- Weekly earnings growth increased 2.84 percent, a reversal of its recent downward trend. One-month annualized growth stood at its highest level since June 2020.
Regional Jobs Index
- The West had its most significant one-month increase, driven by gains in the construction industry, in more than eight years. All other regions decreased.
- The South leads in small business job growth, more than a point ahead of all other regions.
- The Northeast fell to last among regions, with job growth slowing by 0.29 percent in January.
Regional Wage Report
- At 3.69 percent, the Northeast ranks first among regions in hourly earnings growth.
- Down 0.45 percent year-over-year, the South is the only region with a contraction in weekly hours worked.
- Hourly earnings growth has been below two percent in the South for the past quarter, the first time this has happened since 2018.
State Jobs Index
- California climbed four spots in the state rankings, on the back of its best one-month increase in eleven years. The gain was spurred by the construction industry, driving the index to 93.32
- Florida, Texas, and Tennessee are the only states with index levels above 96.
- Maryland is the weakest in one-month growth among all states. A -1.02 percent growth rate pushed it down seven spots.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- New Jersey, followed by Massachusetts and Pennsylvania, leads all states in hourly earnings growth, above four percent in January.
- Aided by consistently positive weekly hours worked growth during the past year, weekly earnings in Michigan increased to 5.11 percent, leading all states in January.
- 15 of the 20 states analyzed have positive year-over-year weekly hours worked growth, with Wisconsin (1.01 percent), Michigan (0.73 percent), and New York (0.61 percent) leading all states.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- The Dallas metro area returns as the highest-ranking for small business employment growth to begin 2021. It previously held the top spot for all of 2019.
- San Francisco fell 0.45 percent to 91.23 in January and is down more than six percent year-over-year, ahead of only Seattle.
- The Denver metro area tumbled 2.27 percent during the past quarter, ranking it fourth among metros. It previously was first among metros from July to November.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- At 5.76 percent, Riverside, CA leads metros in hourly earnings growth, with only one other metro above four percent (Boston at 4.46 percent).
- Hourly earnings growth in San Francisco is below two percent, at 1.74, while Los Angeles, San Diego, and Riverside are above three percent.
- Houston, Miami, and Atlanta are all down more than one percent in weekly hours worked growth.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Almost all industry sectors demonstrated month-over-month stability. The lagging industries included leisure and hospitality.
- As a result of increased COVID-19 shutdowns across the country, leisure and hospitality fell 0.63 percent in January to 86.53 and is now down 10.96 percent year-over-year.
- The housing market boom lifted the construction industry in January by 0.34 percent. Construction continues to lead sectors in small business employment growth.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding 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
- Similar to results seen in the Small Business Jobs Index, construction ranks first among industries in earnings and hours worked growth.
- Weekly earnings growth in leisure and hospitality is down 2.47 percent in January, as the three-month annualized growth rate is down more than ten percent.
- Trade, transportation, and utilities follow construction as the only sector with hourly earnings growth above three percent.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding 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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SOURCE Paychex, Inc.
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