Small Business Jobs Index Moderates as COVID-19 Cases Rise Throughout the U.S.
The latest Paychex | IHS Markit Small Business Employment Watch reveals small business hiring has moderated, with the Jobs Index declining 0.13% to 94.32 in October, marking a 3.89% drop year-over-year.
Despite this, hourly earnings grew by 2.88% and weekly hours worked increased by 0.38% compared to last year. Job growth in the South is the strongest, while the West sees a decline of 0.26% this month. The report emphasizes the need for a new federal stimulus to aid struggling small businesses affected by the ongoing COVID-19 pandemic.
- Hourly earnings grew by 2.88%, indicating wage stability.
- Weekly hours worked increased by 0.38% from last year, showing potential resilience in small business employment.
- Small Business Jobs Index decreased by 0.13%, reaching a new low of 94.32.
- Job growth in the West slowed by 0.26% in October and 0.99% over the past quarter.
- Year-over-year decline of 3.89% in the Small Business Jobs Index reflects ongoing challenges.
ROCHESTER, N.Y., Nov. 3, 2020 /PRNewswire/ -- The latest Paychex | IHS Markit Small Business Employment Watch shows a moderation in small business hiring from the previous month, declining 0.13 percent nationally to 94.32. Hourly earnings growth stood at 2.88 percent in October, while weekly hours worked remained positive, up 0.38 percent from last year.
"The Small Business Jobs Index dipped again in October, coinciding with the recent surge in COVID-19 cases," said James Diffley, chief regional economist at IHS Markit.
"As we mark more than seven months since the CARES Act passed, a new round of federal stimulus will play an important role in alleviating some of the ongoing financial challenges impacting small businesses as a result of the COVID-19 pandemic," said Martin Mucci, Paychex president and CEO. "Our latest survey of small business owners revealed that 44 percent of businesses strongly support a second round of Paycheck Protection Program (PPP) loans."
The report also includes regional, state, metro, and industry level analysis, showing:
- The South remains the top-ranked region for small business hiring and has improved its pace of job growth for the second month in a row.
- Ranking last among regions, job growth in the West slowed 0.26 percent in October and 0.99 percent during the past quarter.
- The Northeast has ranked first among regions in weekly hours worked growth for the past six months.
- With index levels above 96, Florida and Texas are the top two states for small business employment growth.
- New Jersey, Massachusetts, and Pennsylvania lead hourly earnings growth among states.
- At 3.89 percent, hourly earnings growth is strong in Construction and the sector leads in employment growth as well.
- At 88.22 in October and down 0.48 percent from the previous month, Leisure and Hospitality's employment growth is well below all other sectors.
The complete results for October, 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.
Note: Data presented for the month of October was collected from Friday, September 18 through Thursday, October 22, the cutoff date for the Small Business Employment Watch.
National Jobs Index
- At 94.32, the Small Business Jobs Index slowed 0.13 percent in October and 3.89 percent from last year.
- Though the decrease was small, 0.13 percent, the national index reached a new low of 94.32 in October.
- Since its drop in April, the national index has averaged a 0.06 percent monthly decrease during the past two quarters.
National Wage Report
- At 2.88 percent, hourly earnings growth slowed to pre-pandemic levels last seen in early 2020.
- Weekly hours worked growth remains positive at 0.38 percent, though one-month and three-month annualized growth both posted negative rates in October.
Regional Jobs Index
- The South remains the top-ranked region and has improved its pace of job growth for the second consecutive month.
- At 93.29, the West has experienced the weakest one-month growth rate among regions for the fourth straight month and is the lowest-ranked region again in October.
Note: Percentages displayed in the regional heat map reflect 12-month changes.
Regional Wage Report
- The Northeast has ranked first among regions in weekly hours worked growth for the past six months and remains positive year-over-year at 0.79 percent in October; however, growth has slowed for four consecutive months and one-month and three-month annualized growth rates are both negative more than two percent.
- At 2.85 percent, hourly earnings growth slowed for the fifth straight month in the West; hourly earnings growth in the West has averaged above three percent each year since 2016.
Note: Percentages displayed in the regional heat map reflect 12-month changes.
State Jobs Index
- Florida and Texas, the top two states for small business employment growth, both increased again in October and are the only states with indexes above 96.
- California declined most among states in October, 0.56 percent, and is now equal to New York (92.65) and above only Washington (91.20).
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- The northeastern states New Jersey, Massachusetts, and Pennsylvania lead hourly earnings growth among states, and are the only states above four percent.
- New York's year-over-year weekly hours worked growth remains above one percent in October, though one-month and three-month annualized growth rates are down nearly three percent as part-time employees continue to reenter the workforce.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- The top-ranked Denver metro gained 0.71 percent in October, boosting its index above 98; Denver is now the only metro with a positive year-over-year growth rate.
- Of the four California metros analyzed, Riverside ranks the best at 14th; San Diego, Los Angeles, and San Francisco only rank ahead of Seattle for the weakest metro small business employment growth rate.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- At 5.97 percent, Riverside leads metros in hourly earnings growth, with Northeastern metros Boston, Baltimore, and Philadelphia following at over four percent.
- Houston is the only metro with negative weekly earnings growth in October, though Dallas and Atlanta both reported less than one percent growth.
- While most metros saw a downturn in weekly hours worked growth at the start of the pandemic, Detroit increased and has now seen steady increases for seven consecutive months; Detroit ranked first among metros in weekly hours worked growth in April, at 0.35 percent, and again ranks first in October, at 1.77 percent.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- While Construction continues to lead among sectors, Financial Activities has been a close second; at 97.12, Financial Activities has increased four consecutive months and is down just 0.32 percent from last year, best among sectors.
- At 88.22 in October and falling 0.48 percent further for its eighth straight decrease, Leisure and Hospitality is well below all other sectors.
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
- At 3.89 percent, hourly earnings growth is strong in Construction, additionally weekly hours worked growth has been positive for the past 15 months.
- Manufacturing reported 1.90 percent weekly earnings growth in October, weakest among sectors as weekly hours worked growth has been negative since March.
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 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 © 2020 IHS Markit Ltd. All rights reserved.
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Paychex, Inc.
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