New Data Indicates September Showed Slowed Hiring Rates across the US
According to a report from the payroll giant Paychex, small businesses continued to add jobs through September, but hiring has slowed.
IHS Markit Small Business Employment Watch, released Tuesday, indicated that the pace of small-business employment growth improved this summer, but monthly gains slowed considerably to 0.45% in August and 0.15% in September. The 99.95 Small Business Jobs Index component of the Index is close to 100 despite the slowdown. The September increase in hourly earnings was 3.68%, the fourth consecutive monthly increase. Hourly earnings rose from $1.05 to $29.68 in September compared to a year ago. This is the first time year-over-year increase has reached $1 since Paychex started reporting 10 years ago.
The report shows that there are still signs of improvement in both the economy and job market. However, millions of unfilled positions remain at small and large companies despite the expiration of federal unemployment benefits.
Frank Fiorille (VP of Risk Management, Compliance and Data Analytics at Paychex) stated that there is still growth in the small-to-medium-sized Main Street businesses. "The quarter's growth, even though it is growing each month, has slowed down," said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex.
He said that the slowdown was due to a variety of factors, including the Delta version and the pandemic aid that has allowed many Americans to keep their jobs. Fiorille stated that people still have a lot of money left from the stimulus. “We believe that this will shift as the stimulus winds down, regardless of whether it's student loan payments or rent moratoriums. We believe people will start to leave the sidelines, and perhaps they'll look for those jobs.” This could lead to increased employment.
The industry of leisure and hospitality saw the greatest job growth. It grew by 3.86% in the last quarter, ranking first among all sectors for the first-time since 2012.
Construction was the second-weakest sector in terms of jobs index, with a 0.84% 12-month growth rate. The only sector that experienced a negative 3-month growth rate is financial activities, which was -0.06%.
Arizona was overtaken by Texas for the top spot in state job growth. Dallas is leading the charge among metro areas in small-business job growth. It rose 1.18% in September, and 2.85 percent in the last quarter.
Five metro areas, Los Angeles, Riverside, California, Denver, Atlanta, and Tampa, Florida, saw wage gains exceeding 4% in September. The highest industry sector for hourly earnings growth was leisure and hospitality, which grew to 8.4%.
Fiorille says that accountants should keep small-business clients updated about what's going on in Congress. This includes the reconciliation and infrastructure bills that the Biden administration wants to pass through Congress. The prospects of passage for both packages, which contain trillions in spending and tax benefits as well as tax increases, are uncertain.
Fiorille stated that they would like to tackle the infrastructure and offer some more funding to small and medium-sized businesses as well as minority businesses. "We believe we will see an increase in the business environment. We will see if it passes or not.