The latest report from the Paychex Small Business Employment Watch highlights several key trends in small business employment and wage growth in the United States for May. Here are the key highlights:
- Small Business Jobs Index: The Small Business Jobs Index rose by 0.46 percentage points to reach 100.58 in May, marking the largest one-month increase since January 2022. This indicates modest employment gains, albeit at a slower pace compared to the previous year.
- Hourly Earnings Growth: Hourly earnings growth for workers in small businesses slowed to 3.13% in May, marking its lowest level since June 2021. This resumption of a downward trend over the past two years suggests decreased pressure on wages.
- Weekly Earnings Growth: Weekly earnings growth surpassed three percent (3.09%) for the first time since January 2024. This increase was attributed to positive momentum in weekly hours worked by employees in May.
- Challenges Remain: Despite the positive indicators, challenges persist for small business owners, including concerns over inflation, access to capital, and labor shortages.
- Regional Trends: All regions in the United States showed improvements in employment growth in May, with the Midwest leading the way with a one-month increase of 0.61 percentage points.
- Sector-specific Trends: The Leisure and Hospitality sector experienced a notable increase of 0.77 percentage points in May, marking the largest one-month gain since February 2023, following eight consecutive decreases.
- Long-term Outlook: The report suggests early signs of stabilization in employment trends, particularly with regard to weekly hours worked, which had previously been decreasing.
Overall, while there are positive signs of modest employment gains and increased weekly earnings, small business owners continue to face challenges, and the labor market remains dynamic amidst ongoing economic shifts and uncertainties.
