Small business CEOs slowed their hiring last year, with job growth falling even as the economy grew, a survey found.
A small business jobs index kept by Paychex | IHS Markit Small Business Employment Watch reads 99.70 for December, down 0.78% for the year, showing the decline in job growth. After moderating just below 100 for several months, the national index dropped more in December (0.16%) than the past four months combined (0.12%).
At 3.14%, weekly earnings’ annual growth decelerated month-over-month for the first time in several years. At the same time, at $26.14, hourly earnings in December gained 2.76%, or 70 cents, year-over-year.
The decline in job growth has a couple of things behind it, Jim Diffley, chief regional economist for IHS Markit, told FierceCEO.
“The unemployment rate is way down at 4.1% (making the job pool tight) and large businesses are hiring at a more rapid clip,” he said.
“It’s not to say we are contracting, but the rate of hiring is slowing,” Diffley said.
Small business hiring “will not necessarily pick up” in 2018, he added.
On a regional basis, at 100.37, the South is the only area with an index above 100, and ranked first every month in 2017. But it was among all four regions that declined from last month and last year. At a more micro level, only the West South Central, with the oil recovery, and New England improved the pace of small business job growth year-over-year.
At a state level, Tennessee, Washington and Florida led with a stronger level of small business job growth, despite all three decreasing approximately 1% from a year ago.
Remaining in last place among states and falling further, to 97.43, Missouri had its third consecutive steep decline in December and is down 2.45% during the past quarter.
When it comes to metropolitan areas, which improved 1.24% during the past quarter to 102, Seattle's index ranks first among metros for the second consecutive month.
Still down 2% from last year with an index level below 98, San Francisco had the best one-month gain in December, 0.47%.
Small business employment gains in the Washington metro area continue to slow, falling 0.68% in December and 2.44% from last year.
Among industries, with its eighth decrease in the last nine months, leisure and hospitality has dropped 2.73% since March, from 101.79 to 99.01. While all other industries slowed or remained unchanged from last year, manufacturing grew 1.61% and climbed a spot in the rankings for the third month in a row.