After a strong start to 2017, the national jobs index declined for the fourth consecutive month in June, dropping to its lowest level in four years. According to the Paychex | IHS Markit Small Business Employment Watch, small business job gains have slowed due to tightened labor markets and uncertainty among small business owners over legislative policies. The index fell 0.24 percent in June and stands at 100.10.
“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,” said Martin Mucci, Paychex president and CEO.
In spite of the dip in hiring, hourly earnings rose again in June, a 2.88 percent year-over-year increase. That national average hourly wage stands at $25.82. Wage gains are due in part to minimum wage increases in several states and cities this year, and tightened labor markets that have employers competing harder for workers.
“We’re seeing the biggest growth in wages on the lowest paying jobs,” Mucci said. “I think we’ll continue to see that and that will be the thing to watch to see if these wage increases give more spending power to consumers.”
Although job gains slowed in all four U.S. regions, the south continues to lead regional job growth; it’s the only region with an index level significantly greater than the national level, though wages tended to be lower in the South. Tennessee is the number one state in hiring growth, while Dallas remains the top metro area for small business jobs.
Among industries, manufacturing is the only sector to increase the pace of job growth in the first half of 2017, while the construction industry saw the steepest decline in hiring since last year. Hourly earnings growth was weakest in Education and Health Services, with a 2.39 percent increase. Leisure and Hospitality and Other Services saw the biggest gains, growing more than four percent annually. Number of weekly hours worked also increased in every industry except Manufacturing, which only saw a slight decrease year-over-year.