There may not yet be a hiring recession happening again, but small businesses are tempering some of their hiring and rehiring as the new wave of COVID-19 cases increases the odds of another shutdown. Even if a true lockdown does not occur, it can still greatly affect the ways that small businesses operate.
The Paychex/IHS Markit Small Business Employment Watch has shown that hiring trends moderated in October in the small business community. While the drop is not universal around the nation, this index measuring small business hiring declined by 0.13 percentage point nationally to 94.32 (down 3.89% from a year ago).
Some of the responses for this survey may be older than others. Data was collected for the October report from September 18 through October 22. Since its drop in April, the national index was shown to have averaged a 0.06 percent monthly decrease during the past two quarters.
While the hiring may have moderated, earnings are holding up for those who already have jobs. The Paychex/IHS report noted that hourly earnings growth remained at 2.88% to $28.22 per hour in October. Weekly hours remained positive with 0.38% growth in October versus a year earlier.
It has now been more than seven months since the passage of the CARES Act. The Paychex/IHS team believes that a new round of stimulus will be a large factor to relieve ongoing pressure and financial challenges that are having an impact on small businesses. The report suggested that 44% of small business owners and managers are in strong support of a second part of the Paycheck Protection Program loans.
As for regional data, the South remains the top region for small business hiring. In fact, October was the second month in a row that the South improved its job growth rate. It looks like lockdowns and other issues continued to weigh on the West in the United States, with it coming in last place (slowing 0.26% for October and slowing 0.99% for the quarter). For the regions showing the highest growth in weekly hours, the Northeast has ranked first for the past six months.
The Paychex/IHS reading broke out some data by states as well. Florida and Texas were the top states for small business employment growth in October. The states that led in hourly earnings were New Jersey, Massachusetts and Pennsylvania.
The results may be obvious on a sector-by-sector breakout. Hourly earnings growth was strong with a 3.89% growth reading in the construction industry, and construction was also the leader in employment growth. The sector for Leisure and Hospitality’s employment growth fell 0.48% from September to 88.22 in October, and the Paychex/IHS report noted that it remained below all other sectors.
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