Small business employment continues to grow, with the recent "Paychex | IHS Markit Small Business Employment Watch" through the first quarter of 2023 posting consistent numbers.
The Small Business Jobs Index, which measures employment growth, increased modestly (0.06%) from the previous month to 99.73. The March report also showed average hourly earnings increased slightly from the previous month to 4.64%.
In further detail, the March report showed:
- Following several months of moderation, national hourly earnings growth increased slightly to 4.64% in March as one-month annualized growth reached 5.34%.
- The national jobs index has risen for three consecutive months, with the South’s growth—the only region with an index above 100—continuing to lead the country.
- Weekly hours worked rose 0.21% Y-O-Y (to 32.63) while one-month annualized growth moderated for the first time since August 2022.
- The South led regions for the 12th consecutive month and is the only region with an index above 100 ( 100.68). Still, the South reported its first decrease (-0.14%) since September 2022.
- Despite its job growth slowing by 0.42%, North Carolina’s robust performance continued in March, with the state’s index hitting 102.13.
- Illinois’ growth rate rose 0.25% last month and 1.70% year-over-year. At 101.92 and second among states, Illinois’ performance in March is the strongest it’s seen since 2014.
- Small business employment growth remained strong in Houston (103.10), making the city the first among metros for the fifth consecutive month.
- Leisure and hospitality led sectors in jobs growth (101.32) and hourly earnings growth (5.96%).
Paychex solutions reach 1 in 12 American private-sector employees, making the Small Business Employment Watch an industry benchmark. Drawing from the payroll data of approximately 350,000 Paychex clients with fewer than 50 employees, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity.
For the complete results for January, including interactive charts detailing all data, CLICK HERE.
Highlights are available below:
March 2023 Paychex | IHS Markit Small Business Employment Watch
National Jobs Index
- At 99.73, the pace of small business employment growth increased 0.06% in March and 0.35% during the first quarter of 2023.
- Despite consecutive gains in the first three months of 2023, the national Index is down 1.55% from a year ago.
National Wage Report
- Following several months of moderation, national hourly earnings growth increased to 4.64% in March and one-month annualized growth reached 5.34%.
- At 32.63 hours, weekly hours worked were up year-over-year (0.21%), though one-month annualized growth dropped (0.03%) for the first time since August 2022.
Regional Jobs Index
- The South led regions for the 12th consecutive month though and is the only region with an index above 100 (100.68). Still, the South reported its first decrease (-0.14%) since September 2022.
- At 99.96, the Midwest ranked second among regions—as it has for the past two quarters—and its Index has increased for four consecutive months.
- March brought hints of a narrowing growth gap between regions, as the bottom-ranked West led the country in gains (0.19%) and the top-ranked South led in losses (-0.14%).
Regional Wage Report
- The South led hourly earnings growth among regions (4.86%) for the eighth consecutive month.
- The Midwest ranked last among regions in hourly earnings growth (4.45%) and first in weekly hours-worked growth (0.52%).
- Hourly earnings growth in the West grew to 4.77% in March, as one-month annualized growth jumped to 6.24%—its highest level since 2019.
State Jobs Index
- North Carolina’s growth rate slowed 0.42% in March to 102.13. But the state continued its nine-month streak as the country’s leader.
- Illinois’ growth rate rose 0.25% last month and 1.70% Y-O-Y. At 101.92 and second among states, Illinois’ performance in March is the strongest it has seen since 2014.
- At 98.54, California ranked last among states but showed its largest one-month gain (0.22%) in more than a year.
State Wage Report
- Florida ranked first among states for the ninth consecutive month despite its hourly earnings growth rate slowing to 5.56% in March.
- At 3.18%, Virginia remained last among states for hourly earnings growth, a trend that has persisted since June 2022.
- Missouri led overall growth among states for weekly earnings (6.04%) and weekly hours worked (0.93%).
Metropolitan Jobs Index
- Small business employment growth remained strong in Houston (103.10), making the city the first among metros for the fifth consecutive month.
- Falling below 100 for the first time this year, the Dallas metro’s Job Index dropped 5 percent Y-O-Y, falling from 105.12 to 99.86 between March 2022 and March 2023.
- San Diego remains last among metros with its index dropping 4.02% Y-O-Y. At 97.66, it was the only state with an index below 98.
Metropolitan Wage Report
- Miami led metros in hourly (5.80%) and weekly (6.15%) earnings growth.
- San Francisco had the highest hourly earnings among metros ($39.28) but the lowest growth rate (3.55%).
- Philadelphia and nearby Baltimore lead metros in weekly hours-worked growth, 0.46% and 0.45%, respectively.
Industry Jobs Index
- Following four months of gains, leisure and hospitality Job Index dropped to 101.32 in March, though it remained the top sector for small business employment growth.
- Manufacturing slowed 97.71 (a 0.16% drop) in March, maintaining its status as the weakest sector for the eighth consecutive month.
Industry Wage Report
- Leisure and hospitality lead sectors in hourly earnings growth (5.96%) for the fifth straight month, despite falling below 6% for the first time since April 2021.
- Ranked second among sectors, construction reached a new record for hourly earnings growth, reaching 5.28% for the first time since reporting began in 2011.
- Hourly earnings growth for education and health services continued to rank last among sectors as it has for the past 18 months. The average growth rate during that period (3.77%) is in line with the current growth rate (3.78%).
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, dry cleaners, and other businesses.
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