Small Business Employment Rebound Moderates in July

Rhea-AI Summary

The Paychex | IHS Markit Small Business Employment Watch report for July indicates a moderation in employment growth due to rising COVID-19 cases in the South and West. The national jobs index decreased by 0.24% to 94.59. Hourly earnings growth slowed to 3.29%, while weekly earnings grew by 4.14%, driven by increased hours worked. Florida remains the top state for employment growth, despite a 0.44% decline. The Financial Activities sector showed improvement, contrasting with declines in other sectors and regions like Seattle, which saw a 1.89% decrease.

Positive

• Weekly earnings growth rose to 4.14%, with annualized rates exceeding 5%.
• Florida continues to lead state employment growth despite a 0.44% decline.

Negative

• The national jobs index fell by 0.24%, down 3.65% year-over-year.
• Employment growth in the South and West decreased by 0.31% and 0.33% respectively.
• Seattle's employment index dropped by 1.89%, the lowest among U.S. metros.

ROCHESTER, N.Y., Aug. 4, 2020 /PRNewswire/ -- The latest Paychex | IHS Markit Small Business Employment Watch shows that employment growth moderated as new COVID-19 hot spots emerged in the South and West regions of the U.S. The national jobs index slipped 0.24 percent in July to 94.59. Hourly earnings growth also slowed slightly to 3.29 percent last month, but increasing hours worked, spurred by the shifting workforce composition, drove weekly earnings growth up to 4.14 percent, with one-month and three-month annualized growth rates topping five percent.

Note: Data presented for the month of July is through Thursday, July 23, the cutoff date for the Small Business Employment Watch.  

"The jobs index fell slightly in July as a number of states were forced to backtrack on early reopenings," said James Diffley, chief regional economist at IHS Markit.

"The rebound in small business job growth has slowed mostly in regions where there has been a recent surge in cases," said Martin Mucci, Paychex president and CEO. "We're closely monitoring the status of the next expected stimulus bill for additional relief measures that may be necessary for many small businesses in the months ahead."  

The report also includes regional, state, metro, and industry level analysis, showing:

• The South and West reported the largest declines in employment growth, -0.31 percent and -0.33 percent, respectively.
• Despite slowing 0.44 percent in July, Florida continues as the top state for small business employment growth.
• Small business jobs growth in Seattle declined 1.89 percent in July as its index fell to 91.05, lowest among all U.S. metros.
• The Financial Activities industry sector, which includes financial services, insurance, and real estate, was the only sector to experience improved rates of small business employment growth in July and is ranked second behind Construction.

The complete results for July, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch. Highlights are available below. 

National Jobs Index

• The national index slipped 0.24 percent in July, dropping slightly below April's level to 94.59.
• After falling 3.65 percent in April, the jobs index has moved just -0.04 percent during the past quarter.
• At 94.59, the national index has slowed 3.65 percent since last year.

National Wage Report

• Up 1.34 percent year-over-year, weekly hours worked moved higher again as the composition of the workforce continues to change with employers relying more heavily on higher wage earners.
• Weekly earnings growth increased to 4.14 percent, with one-month and three-month annualized growth rates topping five percent.
• Hourly earnings growth slowed slightly to 3.29 percent in July, the first decline since the beginning of the coronavirus pandemic.

Regional Jobs Index

• Coinciding with surging cases, the South and West reported the largest declines in employment growth, -0.31 percent and -0.33 percent, respectively.
• Employment growth in the Northeast has registered historic lows for two consecutive months, down 0.24 percent in June and another 0.22 percent in July.
• The Midwest demonstrated the greatest stability in July, moderating just -0.04 percent.

Regional Wage Report 

• The Northeast leads regional hourly earnings growth at 4.38 percent, and more than six percent annualized during the last quarter.
• At 2.51 percent, the South trails all regions in hourly earnings growth.
• The South has both the weakest hourly earnings and hours worked growth among regions.

State Jobs Index

• Despite slowing 0.44 percent in July, Florida continues as the top state for small business employment growth.
• Washington's index fell 1.84 percent in July, hitting a record low of 91.79.
• After Washington, New York and Massachusetts are the weakest states for small business employment growth.

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

State Wage Report

• New Jersey leads all states in hourly earnings growth, followed by Pennsylvania and Massachusetts.
• Texas has the weakest growth rates among states for both hourly earnings and hours worked.
• New York ranks first among states in weekly hours worked growth, 2.54 percent year-over-year.

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

Metropolitan Jobs Index 

• At 97.98, Denver became the top metro for small business employment growth, replacing Tampa, which fell 1.31 percent to 97.07.
• Seattle slowed 1.89 percent in July as its index fell to 91.05, more than one point lower than the next lowest index, San Francisco (92.40).

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

Metropolitan Wage Report

• Hourly earnings growth in both Houston and Dallas is below one percent from a year ago.
• Baltimore and Philadelphia have surged above five percent hourly earnings growth, trailing only Riverside, California (5.84 percent).

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

Industry Jobs Index

• At 97.89, Construction leads small business employment growth and has regained 1.38 percent during the past quarter.
• The Financial Activities industry sector, which includes financial services, insurance, and real estate, was the only sector to experience improved rates of small business employment growth in July and is ranked second behind Construction.

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 

• Education and Health Services shows the weakest earnings growth among sectors.
• Other Services (except Public Administration) leads sectors in both earnings and hours worked 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.

For more information about the Paychex | IHS Markit Small Business Employment Watch, 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, 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 serves more than 670,000 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 © 2020 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
+1 585-387-6402
lfleming@paychex.com 
@PaychexNews 

Kate Smith
IHS Markit
+1 781-301-9311
katherine.smith@ihsmarkit.com 

Colleen Bennis
Mower
+1 585-389-1865
cbennis@mower.com 

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SOURCE Paychex, Inc.

FAQ

What does the July Paychex employment report indicate for small businesses?

The report shows a slowdown in employment growth due to new COVID-19 outbreaks, with the national jobs index down 0.24%.

How did hourly earnings change in July according to the Paychex report?

Hourly earnings growth decreased to 3.29% in July, marking the first decline since the pandemic began.

What states reported the largest declines in small business employment growth in July?

The South and West reported declines of 0.31% and 0.33%, respectively.

Which sector improved in small business employment growth in July?

The Financial Activities sector was the only sector to experience improved rates of small business employment growth.

What is the current status of the national jobs index as reported in July?

The national jobs index has dropped to 94.59, reflecting a decrease of 0.24% in July.