Top states for small business growth
1. Tennessee — 1.2 percent
2. Indiana — 0.7 percent
3. Florida — 0.4 percent
4. Virginia — 0.3 percent
5. Wisconsin — 0.2 percent
6. Georgia — 0.1 percent
Source: Paychex/IHS Small Business Employment Watch
Tennessee continued to lead the nation in small business hiring last month, according to payroll data compiled by the nation's biggest processor of worker paychecks.
A report by payroll processor Paychex Inc. said Tuesday that employment by Tennessee's small businesses grew faster than any other state during October, marking the fifth consecutive month the Volunteer State has led the IHS Small Business Employment Watch report.
"The performance of Tennessee has remained consistently strong in recent months with a lot of growth in the distribution sector and greater growth in the high-tech sector, especially around Nashville," said Jim Diffley, executive director and chief economist for IHS Markit YS Regional Services Group, which compiles the data from Paychex employers with under 50 employees. "The small business sector seems to be leading the growth in Tennessee in a way we're not seeing in other states."
Tennessee's jobless rate in September, the most recent month for which data is available, fell from a mere 3 percent — the lowest rate on record and the lowest among states in the Southeast. In metropolitan Chattanooga, the jobless rate fell in September to 3.2 percent — the lowest in more than 17 years — and in metrpolitan Cleveland, Tenn., unemployment declined in September to an all-time low of 2.8 percent.
"We're seeing consistent employment growth across all of our industries and we're now at a time of the tightest labor market I've seen in my career," said Doug Berry, vice president of economic development at the Cleveland-Bradley County Chamber of Commerce.
The gains in Tennessee came despite a nationwide slowdown in the Small Business Index for the eighth consecutive month in October, with wage growth also showing a small decline over the past month.
After reaching a milestone of 3 percent growth in year-over-year wages in August, hourly earnings growth has slowed slightly in the past two months, Paychex said.
Hourly earnings among small business employers in October were $26.07, a gain of 2.91 percent or 74 cents per hour, across the United States in the past 12 months.
Despite Tennessee's above-average growth, wages in the Volunteer State remain, on average, 13.4 percent below the U.S. average among small businesses. In Tennessee wages grew by 2.6 percent in the past year to $22.84 an hour, among small business employers in the Paychex report.
In Georgia, small business wages grew, on average, by 2.98 percent in the past year to $24.78 an hour.
Following a significant slowdown in recent months, Georgia had the best one-month growth rate among all states in October, recovering some of the employment growth momentum it held as 2017 began, Diffley said.
Contact Dave Flessner at firstname.lastname@example.org or at 423-757-6340.