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Small Business Job Growth Shows Slight Increase

Job growth at small businesses in the U.S. crept up slightly in August, according to the Paychex | IHS Small Business Jobs Index. The index’s national reading rose to 100.7, a .02% from July and a year-over-year increase of .22%.

The Mountain region, one of the U.S. Census Bureau’s nine regional divisions that the index studies, is first among the regions for small business job growth from July to August; its index reading was up .17% to 101.95. All nine regions had index readings above 100 for the first time since the beginning of the year, with a measurement above 100 indicating growth.

The index has remained steady over the summer months, with a reading of 100.59 in May, 100.81 in June and 100.68 in July.

Paychex president and CEO Martin Mucci attributed the small uptick, in lieu of larger increases, to business owners’ cautious hiring in the months leading up to the presidential election. There are also new health-care and minimum wage regulations with which to contend, he told CNBC, as well as President Obama’s new overtime rules (effective December 1) which will more than double the salary threshold for employees’ overtime pay eligibility.

“These are all putting a little bit of caution on adding jobs, particularly in small business,” said Mucci, “but overall, it’s consistent and it’s steady and it’s good numbers.”

At the state level, Washington is at the top of the list with a reading of 104.30, followed closely by Georgia and Virginia. Among cities, Seattle had the strongest one-month gain, with an index reading of 104.93, followed by Atlanta and Dallas.

Job growth at small businesses eased the previous month in eight of the nine industries that the index tracks. The “Other Services” industry, which excludes Public Administration, showed the most growth of all studied sectors from July to August, with a reading of 105.25 and a year-over-year increase of 1.67%.

“The other services sector is still by far the strongest, and these are discretionary services, [such as] pet care, personal care,” Mucci said. “Unfortunately some of those are part-time.”

Counselor’s State of the Industry report found that a third of distributors (32%) plan to increase their number of personnel this year, with only 4% planning to decrease their numbers.

The Paychex IHS index analyzes same-store, year-over-year changes in employee counts to determine employment trends.