Small Business Job Growth Advances in July Amid Signs of Strong Economic Rebound

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ROCHESTER, N.Y., Aug. 3, 2021 /PRNewswire/ -- National job growth in July saw a significant increase, with the Small Business Jobs Index rising by 0.85%, marking the highest level since 2018. The index reached 99.36, up over 5% from last year, signaling a robust recovery from the pandemic. Hourly earnings growth improved to 3.11%, and small business employment surged across all sectors and regions. Arizona led state growth at 101.72, while Dallas and Tampa topped metropolitan areas with indexes above 102.

Positive

• Small Business Jobs Index increased by 0.85%, the second strongest one-month growth since 2010.
• Hourly earnings growth improved to 3.11%, first time above 3% since last year.
• Small business employment growth across all industry sectors and regions indicates strong economic recovery.

Negative

• Weekly hours worked growth declined for the fourth consecutive month, slowing from 0.52% in March to -0.58% in July.
• Construction sector index at 98.40 shows a slowdown of 2.30% during the past quarter.

ROCHESTER, N.Y., Aug. 3, 2021 /PRNewswire/ -- National job growth in July was up notably across all industry sectors and regions over the previous month, according to aggregated payroll data of approximately 350,000 clients provided by Paychex. The data released in the latest report of the Paychex | IHS Markit Small Business Employment Watch shows the Small Business Jobs Index jumped 0.85 percent in July, the second strongest one-month increase since 2010, the period of recovery following the Great Recession. At 99.36, the small business jobs index is up more than one percent over last quarter and five percent from last year, suggesting a significant recovery from the COVID-19 pandemic. Hourly earnings growth improved to 3.11 percent in July, up from June's increase of 2.84 percent.

"Hiring at small businesses across the U.S. grew significantly in July," said James Diffley, chief regional economist at IHS Markit. "The national index jumped to 99.36, the highest level since the summer of 2018."

"The rate of hiring continues to increase steadily across all sectors," said Martin Mucci, Paychex president and CEO. "July's small business job and wage growth numbers indicate a continued rebound of the economy as employment increases."

In further detail, the July report showed:

• The national index gained 1.04 percent during the past quarter, improving to 99.36.
• Small business employment growth improved across all industry sectors in July.
• All regions improved sizably in July, but the South continues to lead in small business job growth.
• Arizona now leads all states in small business job growth at 101.72.
• Dallas joins Tampa to lead all metros in employment growth, each with indexes above 102.

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 July, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below. 

National Jobs Index

• The 0.85 percent jump in July matches the rapid growth seen in the overall economy and is the second strongest one-month increase since recovering from the Great Recession in 2010.
• At 99.36, the Small Business Jobs Index is up more than one percent during the past quarter and five percent from last year, both strong signs of continuing recovery from the coronavirus pandemic.
• The national index gained 1.04 percent during the past quarter, improving to 99.36.
  

National Wage Report

• Hourly earnings growth improved to 3.11 percent in July, marking the first month above three percent since last August.
• Weekly hours worked growth slowed for the fourth consecutive month, from 0.52 percent in March to -0.58 percent in July.
• Weekly earnings growth increased to 2.45 percent in July, up from a two-year low of 2.34 percent in June.

Regional Jobs Index

• All regions improved in July, with the West region leading gains at 1.07 percent and the Midwest trailing at 0.46 percent.
• The South improved 0.96 percent in July. Its index (100.38) leads regions and topped 100 for the first time since May 2018.
• The Northeast is up 5.60 percent from the previous year – the best among all regions. Note: The larger recovery is due to a weaker base level in 2020 caused by the early state shutdowns in the region.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

Regional Wage Report   

• The West has the highest hourly earnings rate and growth among regions, at $31.14 and 3.49 percent, respectively. The lower the hourly earnings rate, the weaker the growth is compared across all regions.
• Weekly earnings growth in the Northeast stands at 2.26 percent in July, nearly one percent lower than hourly earnings growth as weekly hours worked are down year-over-year.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

State Jobs Index

• Arizona is the new leader in small business job growth among states at 101.72, slightly edging Texas at 101.64.
• Following Arizona and Texas, east coast states North Carolina, Georgia, and Florida round out the top five with indexes around 101.
• Washington no longer has the lowest levels of small business job growth among states. Employment growth in the state increased by 2.25 percent in July. 

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

State Wage Report

• Missouri ranks first among states for hourly earnings growth for the third consecutive month, at 4.00 percent in July.
• Texas ranks first among states in average weekly hours worked (34.10 hours) and year-over-year growth (0.83 percent).
• California reported 3.95 percent weekly earnings growth in July, best among states, with one-month and three-month annualized rates above four percent.

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

Metropolitan Jobs Index 

• Tampa and Dallas lead metros in small business employment growth, each with indexes above 102.
• Since historical reporting began in 2004, the Washington, D.C. index (96.98) ranks lowest among metros.
• Atlanta had the second strongest gain in July, increasing 2.28 percent to fourth place among metros at 101.08.
• Denver was the only metro index to slow in July, falling 0.47 percent to 98.70.

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

Metropolitan Wage Report

• Los Angeles, and inland neighbor Riverside, top the metros for hourly earnings growth, are both above four percent.
• Denver is the only other metro with hourly earnings growth of over four percent.
• Baltimore is the only metro with hourly earnings growth below one percent in July.
• Boston ranks fourth among metros in hourly earnings growth (3.90 percent), but is 12th in weekly earnings growth (2.79 percent) as weekly hours worked are down nearly five percent during the past quarter on an annualized basis.

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

Industry Jobs Index

• The pace of small business employment growth improved in all sectors in July.
• Leisure and hospitality gained 1.91 percent from the previous month, growing its index to 100.31. While the rate of small business job growth is currently far faster than prior to the pandemic, the sector remains critically underemployed.
• The construction index (98.40) ranks second to last among sectors and has slowed 2.30 percent during the past quarter. Professional and business services (97.95) are the only sector with a weaker small business employment growth rate.

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. The chart's dark blue bars reflect the index level and the light blue diamonds reflect the 12-month change.     

Industry Wage Report 

• Leisure and hospitality continue to outperform all other sectors in both earnings and hours worked growth, ranking first in each month since April. Weekly earnings growth is up double digits for the second-straight month.
• Except for leisure and hospitality, all sectors have negative weekly hours worked growth year-over-year.

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 50 years of industry expertise, Paychex served more than 710,000 payroll clients as of May 31, 2021 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.

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

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

Melissa Mazurek
Mower
+1 585-389-1809
mmazurek@mower.com  

 

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SOURCE Paychex, Inc.

FAQ

What is the Small Business Jobs Index for July 2021?

The Small Business Jobs Index for July 2021 is 99.36, reflecting a 0.85% increase.

How much did hourly earnings grow in July 2021?

Hourly earnings grew by 3.11% in July 2021.

Which state had the highest small business job growth in July 2021?

Arizona had the highest small business job growth at 101.72.

What does the Paychex | IHS Markit report indicate about employment trends?

The report indicates overall small business employment growth across all sectors and significant recovery from the pandemic.

What were the trends in weekly hours worked in July 2021?

Weekly hours worked growth declined to -0.58% in July 2021, marking the fourth consecutive month of decline.