Small businesses saw moderate job growth in February

Small business employment held steady last month, according to payroll company Paychex, while wage growth continued below 3%

The Paychex Small Business Employment Watch's Small Business Jobs Index, which measures employment growth among U.S. businesses with fewer than 50 employees, was 100.04, indicating moderate job growth. Hourly earnings growth for small business workers remained below 3% (at 2.92%) for the fourth month in a row. Hourly earnings growth has been mostly flat for the past seven months, ranging from 2.90% to 3.01%.

"Our employment data continues to show moderate job growth and wage growth below three percent," said Paychex president and CEO John Gibson in a statement Tuesday. "The consistent long-term trend we're seeing is a small business labor market that is resilient and stable with little job movement among workers. At the same time, small business owners are optimistic about future business conditions despite uncertainty about how to adapt to a rapidly evolving legislative and regulatory landscape."

The Midwest remained the top region in the country for the ninth consecutive month with a jobs index level of 100.54. Seven of the 20 states analyzed gained more than one percentage point in February, led by Texas (up 2.11 percentage points).

Phoenix (101.92) increased its rate of small business job growth for the fourth month in a row in February to rank first among the largest U.S. metros.

Construction (3.29%) regained its top spot among industries in terms of hourly earnings growth in February, followed closely by "other services" (3.27%) and manufacturing (3.21%).

The pace of job growth in manufacturing gained 2.39 percentage points to 99.52 in February, the industry's biggest one-month increase since April 2021.