Hiring at U.S. small businesses slowed for the fifth consecutive month, according to the latest Paychex | IHS Markit Small Business Employment Watch. The Small Business Jobs Index moderated -0.66 percent from the previous month and stands at 100.14. The pace of wage increases slowed slightly from the previous month, with average hourly earnings growth at 5.08 percent compared to 5.13 percent in June 2022.  

"As the national GDP flattens, the Small Business Jobs Index also slowed significantly in July," said James Diffley, chief regional economist at IHS Markit. "With an index level above 100, we're seeing continued job growth, but the pace of that growth has declined."

"For nearly two years, businesses added staff at a rapid pace to make up for the losses experienced during the pandemic," said Martin Mucci, Paychex CEO. "While the growth rate has slowed, additional analysis of our client base indicates demand for workers continues to be robust while the shortage of available applicants is slowing the overall job growth rate."

In further detail, the July report showed:

• The jobs index in all regions declined in July, with the West slowing the most (-0.81 percent).

• At 100.67, the South continues as the strongest region for small business employment growth.

• North Carolina is the new top state for job growth; Florida is the new top state for hourly earnings growth.

• Dallas continues to lead U.S. metros in small business job growth and hourly earnings growth for workers.

• Other services (except public administration) remained the top sector for job growth in July at 103.11.

Paychex solutions reach 1 in 12 American private-sector employees, making the Small Business Employment Watch an industry benchmark. Drawing from the payroll data of approximately 350,000 Paychex clients with fewer than 50 employees, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity.