Small Business Job Growth Continues to Accelerate in August
National job growth continued to rise significantly in August, 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 gained 0.45 percent in August. At 99.80, the national index has increased 5.74 percent during the past 12 months, representing a record-high year-over-year growth rate. Hourly earnings growth increased to 3.42 percent in August, its third consecutive gain.
“The Small Business Jobs Index reached its highest level since January 2018,” said James Diffley, chief regional economist at IHS Markit. “The national index climbed 1.56 percent in the quarter to 99.80.”
“August’s growth in employment suggests continued economic recovery,” said Martin Mucci, Paychex president and CEO. “In the weeks ahead, we’ll be examining the impact of the conclusion of extended COVID-19 unemployment benefits, which could provide another boost to hiring.”
In further detail, the August report showed:
- Leisure and hospitality continued its recovery in August with its employment index surging to 101.90, up 14.61 percent since August 2020.
- Hourly earnings growth is up 8.36 percent since last year in leisure and hospitality.
- All regions of the U.S. had sizable employment gains in August. The South remains the leader in small business job growth.
- Arizona continues to lead all states in small business job growth.
- Tampa leads all metros in small business employment growth, with Dallas, Atlanta, Phoenix, and Houston rounding out the top five.
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 August, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
National Jobs Index
- The pace of small business employment growth continues to accelerate this summer. The national index gained 0.45 percent in August and 1.56 percent during the past quarter.
- The recovery in the leisure and hospitality sector has driven much of the gains in small business employment growth seen nationally.
- At 99.80, the national index has gained a record-high 5.74 percent during the past 12 months.
National Wage Report
- Hourly earnings growth increased to 3.42 percent in August, its third consecutive increase. One-month annualized growth surpassed four percent for the fourth straight month, indicating stronger growth in recent months.
- Weekly earnings growth also improved in August, though only slightly (2.48 percent) with weekly hours worked continuing to slow.
- Weekly hours worked growth (-0.75 percent) has posted negative year-over-year growth since May.
Regional Jobs Index
- The employment gains seen in August were across all U.S. regions.
- The South continues to lead small business employment growth, far ahead of the Northeast and Midwest.
- Improving for the sixth consecutive month, the West jumped 0.71 percent in August. Its index reached 100 for the first time since 2017.
Regional Wage Report
- Hourly earnings growth is above three percent in all regions in August, with the West leading at 3.80 percent.
- With weekly hours worked growth down more than one percent, weekly earnings growth in the Northeast is below two percent.
State Jobs Index
- Arizona continues to lead states at 102.58, slightly edging Texas, 102.28.
- Ranked last among states from July 2020 through June 2021, Washington has quickly improved to 12th among states in August. Washington has the strongest one-month (1.84 percent), three-month (4.88 percent), and 12-month (9.24 percent) growth rate.
- Tennessee and Illinois were the only states where the pace of small business employment growth slowed in August.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- California (4.16 percent) and Missouri (4.04 percent) are the only states with hourly earnings growth above four percent.
- Texas, Washington, and Georgia are the only states with positive weekly hours worked growth compared to last year.
- New Jersey reported weekly earnings growth below one percent in August, the weakest among states.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Tampa leads all metros at 103.41, with Dallas, Atlanta, Phoenix, and Houston rounding out the top five, all with indexes above 101.
- Seattle jumped 2.02 percent in August and 9.99 percent during the past year, reflecting the strongest growth among metros.
- Washington D.C. and Baltimore trail other metros, each below 98.
- Baltimore and Denver were the only metros where the pace of small business employment growth slowed in August.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- Hourly earnings growth in Los Angeles improved for the seventh straight month, reaching 4.77 percent in August and topping metro rankings.
- Houston leads metros in weekly hours worked growth, up 0.81 percent.
- Seven of the 20 metros analyzed have weekly earnings growth below two percent due to a reduction in weekly hours worked.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Leisure and hospitality continued its recovery in August surging to 101.90. Its index is up 14.61 percent year-over-year, more than double the growth of any other sector. Nevertheless, leisure and hospitality remains the sector with the most employment to regain.
- Manufacturing saw a 0.72 percent increase in job growth in August, improving for the seventh month in 2021. The manufacturing index jumped to third among sectors, its highest ranking since 2014.
- Construction was the only sector where the pace of small business employment growth slowed during the past quarter (down -0.41 percent).
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here.
Industry Wage Report
- Leisure and hospitality is the only sector with weekly earnings growth that’s faster than hourly earnings growth, indicating small businesses are struggling to keep weekly hours worked consistent.
- Hourly earnings growth in the trade, transportation, and utilities sector improved for the ninth consecutive month (3.12 percent in November 2020 to 4.49 percent in August 2021).
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here.
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.
