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Small Businesses Are Hiring Less, but Wages Are Rising

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The labor market seems to be tightening.

ROCHESTER, NY — The Paychex-IHS Markit Small Business Employment Watch for June marks four consecutive months of decline in small business job growth, but a continued increase in wages.

The Small Business Jobs Index decreased 0.24 percent to 100.10 in June. The index is at its lowest level since late 2011. National hourly earnings in June were $25.82, increasing 2.88 percent (72 cents) year-over-year.

“Small business job gains have slowed, consistent with tightening labor markets. Wage gains continue at a moderate pace, up 2.88 percent from last year,” said James Diffley, chief regional economist at IHS Markit.

Martin Mucci, Paychex president and CEO, said: “Over the past month we’ve seen continued uncertainty as it relates to legislative policies that stand to impact small businesses. The decline in this month’s index and modest growth in wages seem to reflect an unclear regulatory picture combined with a narrowing labor market.”

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National Jobs Index

Despite a strong start to 2017, at 100.10, four consecutive declines have the national index at its lowest level since late 2011, with employment growth conditions returning to the levels established during the base year of 2004. This coincides with the U.S. unemployment rate declining to similar levels of that time, per the BLS.
Continuing its deceleration, the Small Business Jobs Index declined 0.24 percent to 100.10, the lowest one-month growth rate in four years.

National Wage Report

Up 2.88 percent year-over-year, hourly earnings growth was unchanged from the previous month.
The 12-month growth in weekly earnings accelerated to 3.10 percent, helped by a 0.25 percent increase in weekly hours worked.

Read the full report from Paychex

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