It’s still too soon to call the U.S. Department of Labor’s unemployment situation report due this Friday, but the Paychex and IHS Markit report called the Small Business Employment Watch showed a drop in June. The Small Business Jobs Index fell 1.09% to 98.32 in June.
While that drop is the continued trend, hourly wages at small businesses rose 2.65% to $27.21 in June. The hourly earnings rate may be up, but the overall weekly wages were shown to be up by a lesser amount of 2.02% because the weekly hours were down by 0.34% in June.
The national highlights from the wages data showed that hourly earnings growth rose for the third consecutive month, with a three-month annualized growth rate of 2.94% hourly earnings growth during the past quarter that was the strongest since 2017. Still, with weekly hours worked growth having been negative for the past three quarters, that overall weekly income growth is at a four-year low.
It is impossible to use the small business data when both the ADP month employment data and the Labor Department data include small, medium and large businesses in their calculations. Still, the Small Business Employment Watch is drawn from the payroll data of approximately 350,000 Paychex clients. It then breaks the data out on a national, regional, state, metro and industry basis to indicate real-time insight on the health of the economy.
The West region showed the sharpest rise in wages with a 3.13% gain to $28.73 per hour, and the Northeast saw wage growth of 2.67% to $27.67 per hours. Those regionally higher bump-ups may be tied to more pronounced gains in the minimum wage. The Midwest and the Northeast saw the largest acceleration in hourly earnings gains in June, but the Midwest lagged at 2.6% growth ($25.79 per hour) and the South finished lower with 2.29% growth ($26.19 per hour).
By industry, the top wage growth per hours and by industry within small businesses was as follows:
- Leisure & Hospitality up 4.70% to $17.35
- Manufacturing up 3,68% to $27.05
- Trade, Transport & Utilities up 3.53% to $25.08
- Construction up 3.36% to $28.12
- Financial Activities up 2.44% to $31.41
- Professional & Business Services up 2.16% to $32.97
- Other Services (ex-Public Admin.) up 1.53% to $23.53
- Education & Health Services up 1.29% to $28.05
With wage growth of 3.97% to $29.79, hourly earnings growth in June was the fastest in Illinois. New York, Missouri and California led the other states with wage growth above 3.0%, and New Jersey, Ohio, Michigan, Texas and Maryland all lagged handily with wage growth of less than 2%. Indiana was the worst state for wage growth at small businesses with a mere 0.65% gain to $23.67 per hour.
San Diego maintained having the highest hourly earnings growth among major metro areas with 4.24% growth to $28.75 per hours in June, and it was the only metro area to see wage growth exceed 4%. Chicago’s hourly earnings growth continued to rise rapidly, and it was in second place for metro areas with 3.89% wage growth to $28.97 per hour.
The government’s unemployment and payrolls data is due on Friday, July 5. The Dow Jones (Wall Street Journal) consensus estimates were last seen as follows:
- Unemployment exp. flat at 3.6%
- Average hourly earnings up 3.2% annually
- Nonfarm payrolls expected to be up 165,000 (after just 75,000 in May)
Stay tuned.
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