Small businesses boost job growth in May, wage growth lags.

TLDR:

• Small businesses added the most jobs in May since early 2022.
• Hourly earnings growth for employees in U.S. small businesses slowed to 3.13%, the lowest level since June 2021.

Small businesses added more jobs in May, with the Small Business Jobs Index rising by 0.46 percentage points. However, hourly earnings growth slowed to 3.13%, the lowest level since June 2021. Despite this, weekly earnings growth exceeded 3% for the first time since January 2024. The report highlighted positive momentum in weekly hours worked by employees in May, leading to a slight increase in annualized hourly earnings growth. Every region of the country showed improved employment growth in May, with the South leading the way. The leisure and hospitality sector also saw increased job index, while manufacturing continued to struggle.

On the accounting front, small businesses and accountants were urged to be aware of the Corporate Transparency Act and beneficial ownership reporting requirements to FinCEN. Non-compliance could lead to hefty fines, though some small businesses are currently exempted. Overall, while job growth was positive, wage growth for small business employees remains a concern, with wages increasing at a slower pace.