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Small business employment reaches highest level of 2026, Paychex reports
Small business employment reaches highest level of 2026, Paychex reports
Listen to this articleSmall business hiring continued to strengthen in May, according to the latest Paychex Small Business Employment Watch.
The Paychex Small Business Jobs Index, which tracks employment trends among businesses with fewer than 50 employees, increased 0.18 percentage points in May to 99.34. The gain marks the third consecutive month of improvement, and the highest reading recorded so far in 2026.
The sustained increase is notable because it represents the first three-month stretch of accelerating job growth since February 2023. According to Paychex, the trend reflects broad-based strength across industries and regions as employers continue to add workers heading into the summer months.
“The small business job growth rate has increased three consecutive months, reinforcing the durability and underlying strength of the labor market on Main Street,” said John Gibson, Paychex president and CEO. He noted that most states and metropolitan areas included in the index reported gains in May, mirroring hiring trends among larger employers as well.
Compensation measures also remained positive. Hourly earnings growth held steady at 2.73%, while weekly earnings growth increased for the fifth consecutive month, reaching 2.98%—its strongest pace since January 2024. Weekly hours worked also rose for a third straight month, marking the first such streak since 2021.
Sector performance continued to highlight the strength of service-oriented industries. Education and Health Services maintained its leadership position in job growth, a distinction it has held in nearly every month since the start of 2024. Manufacturing, however, emerged as the strongest-performing sector overall, recording the largest gains across one-, three- and 12-month measurements.
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