National small business job growth continued to increase in January as did earnings for workers, according to the Paychex | IHS Markit Small Business Employment Watch. According to the report, Arizona ranked second in small business job growth in January with an index of 102.58. Phoenix ranks fifth among all metros with an index of 101.82. Arizona is one of three states with positive weekly hours worked growth year-over-year (4.77 percent).

The January data shows the Small Business Jobs Index, which measures the year-over-year rate of employment growth, gained 0.39 percent in January. At 101.33, the national index has increased 7.80 percent over the past year, surpassing its 2014 peak. At 4.43 percent year-over-year, hourly earnings growth maintained its record high set last month (December 2021).

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“The pace of small business job growth continued to grow in January, reaching a new record high powered by the return to work in leisure and hospitality,” said James Diffley, chief regional economist at IHS Markit.

“Small businesses are continuing to recover from the job losses experienced at the start of the COVID-19 pandemic. While employment has not returned to pre-pandemic levels, the sustained growth in jobs is certainly positive,” said Martin Mucci, Paychex CEO. “Workers are also continuing to command higher pay. Hourly earnings growth in January matched the peak level set just last month.”

In further detail, the January report showed:

• The national index gained 0.39 percent in January, in line with its average monthly gain in the last six months of 2021.

• At 4.43 percent year-over-year, hourly earnings growth continued to show strength, remaining at its peak level hit in December 2021.

• Hiring in leisure and hospitality (107.25) accelerated further ahead of other sectors, gaining 1.49 percent in January and 23.94 percent since last January.

• Likely due to the COVID-19 omicron variant, one-month annualized weekly hours worked growth dropped nearly eight percent in leisure and hospitality in January.

• Job gains were broad-based as all regions of the U.S. advanced in January, though the West leads all regions at 101.65, improving for the eleventh consecutive month.

• Texas remained the top state for small business hiring and Dallas the top metro.

Paychex business 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.

The complete results for November, including interactive charts detailing all data, are available at www.paychex.com/watch.