Job Growth Rate in Small Businesses Increases Significantly in April
The Paychex | IHS Markit Small Business Employment Watch reports a significant job growth increase of 4.33% from March to an index level of 98.34 in April 2021, marking a return to pre-pandemic employment levels. Every U.S. region, state, and metro analyzed experienced job gains, with the South leading at 99.42. Notably, leisure and hospitality sectors had the highest job growth while construction retained the highest index at 100.72. Hourly earnings growth slightly decreased to 2.84%. The report indicates that small business employment is recovering steadily.
- Small Business Jobs Index increased 4.33% to 98.34, indicating job growth recovery.
- All analyzed regions, states, and metros reported employment gains, with the South leading at 99.42.
- Leisure and hospitality saw significant job growth, increasing 9.17%.
- Construction maintained the highest jobs index at 100.72.
- Hourly earnings growth slowed to 2.84%, the first decrease of 2021.
ROCHESTER, N.Y., May 4, 2021 /PRNewswire/ -- The Paychex | IHS Markit Small Business Employment Watch, compiled from aggregated payroll data of approximately 350,000 clients on the Paychex human capital management (HCM) suite, is out with the latest numbers. The Small Business Jobs Index increased 4.33 percent from March to 98.34 in April, a positive indicator of job growth returning to pre-pandemic levels. The increase is in part driven by the comparison period of one year ago (detailed below). Each region, state, and metro area analyzed in April 2021 saw employment gains. The South leads all regions at 99.42.
"A return to full employment is not complete. However, the Small Business Jobs Index returned to its pre-pandemic peak, seen in February 2020," said James Diffley, chief regional economist at IHS Markit. "We're encouraged by the progress in job growth we see in the April numbers."
"The country has been waiting for a significant increase in job growth since this time last year—and April delivered. Many businesses are finally able to resume regular operations with the onset of vaccine availability for all U.S. adults," said Martin Mucci, Paychex president and CEO. "The significant growth seen in the leisure and hospitality industry, over the last two months, will only accelerate with the upcoming financial relief available by the Restaurant Revitalization Fund grants made available this week by the SBA."
In further detail, the April report showed:
- Job growth improved in all four U.S. regions in March, as well as in all 20 states, and all 20 metros analyzed.
- The South continues to lead all regions in small business job growth.
- Texas took the top ranking for job growth among states.
- Leisure and hospitality saw the greatest improvement among industry sectors, but construction still has the highest index at 100.72.
- Leisure and hospitality and construction both also saw a significant gain in hourly earnings growth, 6.78 percent and 4.00 percent, respectively.
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 April, including interactive charts detailing all data are available at www.paychex.com/watch. Highlights are available below.
Note: Data presented for the month of April was collected between March 19, 2021 and April 22, 2021. The significant increase in the Small Business Jobs Index from March 2021 to April 2021 is driven in part by the same-store year-over-year methodology used to create the Small Business Jobs Index. The comparison used to calculate Small Business Jobs Index for April 2021 was April 2020, the most impactful month of COVID-19-related shutdowns. The lower employment level in April 2020 used for comparison created a base effect impact.
National Jobs Index
- The national index spiked 4.33 percent in April to an index level of 98.34. Strong gains from March to April were present. However, the year-over-year increase is driven in part by the low employment levels of the April 2020 comparison period.
- The Small Business Jobs Index has improved for four straight months as smaller decreases in early 2021 gave way to significant gains.
- At 98.34, small business employment growth is back to pre-pandemic levels.
National Wage Report
- Hourly earnings growth slowed slightly to 2.84 percent, the first decrease of 2021.
- Weekly earnings growth settled to 3.43 percent in April. One-month annualized growth has averaged more than five percent during the first four months of 2021.
- Weekly hours worked growth retreated slightly in April but remains positive year-over-year (0.44 percent).
Regional Jobs Index
- At 99.42, the South leads all regions in jobs growth recovery, more than a point higher than the next highest region, the Midwest at 98.16.
- The Northeast had the most significant improvement over last month among regions (4.69 percent) but remained the weakest index at 97.82.
Regional Wage Report
- The Northeast leads all regions in hourly earnings growth at 3.70 percent, though the region slowed from four percent in March.
- The South ranks first among regions in small business employment growth but last in earnings growth.
- All regions have positive year-over-year weekly hours worked growth.
State Jobs Index
- Texas, Florida, Arizona, and Tennessee are among the top states, each with index levels that returned to 100 or above.
- Washington ranks last among states at 94.77, trailing all others by more than a point and a half.
- New York gained 5.09 percent in April, the third strongest one-month growth rate among states. For context, New York was one of the first states with significant lockdowns last year, which led to a lower employment level for the April 2020 comparison period.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- Missouri overtook Massachusetts for the top-ranked state for hourly earnings growth. Both are the only states with hourly earnings growth above four percent.
- California's weekly earnings growth has more than doubled to 4.48 percent during the past four months.
- Texas has propelled to second place among states for weekly hours worked growth.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Tampa, Dallas, and Phoenix are among the top metros, each with index levels that returned to 100 or above.
- Seattle, Washington, and San Francisco trail all metros, each below 96. Washington is the only metro with a negative year-over-year growth rate.
- Minneapolis surged 6.79 percent in April, the best one-month gain among states. Minneapolis was one of the metros hit hardest in April 2020, causing a lower employment level for the comparison period.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- At 5.41 percent, hourly earnings growth in Riverside, CA slowed by more than one percent in the past month. However, Riverside led all metros in hourly earnings growth by more than one percent.
- Seattle's hourly earnings growth is weakest among regions, slowing below one percent in April.
- In Houston, weekly hours worked are down 1.10 percent, the only metro with negative weekly hours worked growth.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Leisure and hospitality gained 9.17 percent in April but still trails other sectors at 95.39.
- Construction was once again the top sector for small business job growth for the twelfth consecutive month.
- Financial activities, which includes financial, insurance, and real estate firms, gained 1.58 percent to 98.71, returning to its pre-pandemic ranking.
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
- As establishments expand capacity and re-open, weekly earnings growth in the leisure and hospitality sector has quickly reversed course, from -1.78 percent in January 2021 to 6.78 percent in April 2021.
- Weekly earnings in construction increased for the fifth consecutive month to 4.00 percent.
- Weekly hours worked growth has been negative in manufacturing for the past year.
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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