Accounting lost 5,400 jobs in May despite positive employment report

Employers added a robust 172,00 jobs overall to the economy last month, the U.S. Bureau of Labor Statistics reported Friday, but there were job losses in some sectors, including 5,400 jobs shed in accounting, tax preparation, bookkeeping and payroll services.

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The BLS reported that most of the job gains occurred in the leisure and hospitality industry, local government and health care, while employment in financial activities such as insurance and commercial banking declined. The overall employment report beat economists’ expectations and the number of jobs added in March and April was revised upward by a total of 93,000 jobs combined. Average hourly earnings increased 3.4% over the course of the year, but still behind the inflation rate.

Small businesses have also been adding jobs in recent months. Payroll provider Paychex reported Tuesday that it has seen three consecutive months of job gains among businesses with fewer than 50 employees. Its jobs index increased 0.18 percentage points in May to 99.34, its highest level so far this year. Hourly earnings growth remained steady at 2.73% in May, but U.S. small-business workers experienced continued growth in both weekly hours worked and earnings for the month.  

“This is the first time since February of 2023 that we’ve seen three consecutive months,” said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex. “It’s not gangbusters, but it looks like it’s starting to tick up a little bit. It’s validated by some of the other job reports out there, like today’s non-farm payroll number was pretty strong versus what the consensus was. We’re starting to see some growth that we thought would start to kick in, given some of the tailwinds that small businesses have.”

He cited positives such as the impact of the One Big Beautiful Bill Act and the deregulatory trend, as well as increases in manufacturing activity reported by the Institute for Supply Management. 

Weekly earnings growth (2.98%) rose for the fifth month in a row in May to its highest level since January 2024 when it was 3.08%, while weekly hours worked growth (0.12%) was positive for the third consecutive month in May. This is the first three-month positive streak since April 2021, when weekly hours worked increased for four consecutive months.

Of the top 20 largest states analyzed by Paychex, 14 recorded an increase in small-business job growth in May. Tennessee gained 1.62 percentage points to a jobs index of 100.87, including a more than five-percentage-point gain in the manufacturing and construction sectors for the month.

“The Midwest continues to outperform and do a lot better than the coasts and even the South,” said Fiorille. “The South used to lead continuously.”

Small-business job growth increased in 15 of the top 20 largest U.S. metro areas in May, including Phoenix (100.95) reclaiming its position as the top-ranked metro for the fifth time in the last eight months.

Education and health services (100.37) continued to lead sectors for small-business job growth in May, the position it has held in all but one month since 2024.

Manufacturing (99.04) reported the strongest one-, three-, and 12-month increases in small-business job growth among industries.

Fiorille advises accountants to keep an eye on interest rate risks. “With the new Fed chairman coming in, and inflation still pretty high, what’s going to be the monetary policy, and how does that impact small businesses and what CPAs need to do for them?” said Fiorille. “That’s the big thing, along with AI and the legislation that was just released.”

On Thursday, two House Republicans, Rep. Jay Obernolte of California and Lori Trahan of Massachusetts, introduced legislation that would effectively preempt state laws governing artificial intelligence.