Small business hiring grew in April

Small businesses with less than 50 employees continued to add jobs last month despite the growth in gas prices, according to a new report from payroll provider Paychex.

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The national Small Business Jobs Index rose 0.35 percentage points from March to April, to 99.16, and grew 0.39 percentage points since February. In addition to marking its largest one-month increase since February 2025, that represents the largest two-month gain in more than three years, since February 2023. 

All four regions of the U.S. increased their pace of small-business employment growth in April, with the biggest one-month gains showing up in the Northeast (0.56 percentage points) and the West (0.50 percentage points). The Midwest stayed the top region for small business job growth for the 23rd month in a row, at 99.55.

Wisconsin (100.84) and Philadelphia (100.09) led the largest states and largest metropolitan areas, respectively, for small-business job growth in April.

With a 98.97 jobs index, the construction industry experienced the largest one-month gain among industries (up 0.64 percentage points). Construction’s jobs index was stronger in the Midwest (101.00) and Northeast (100.43) than in the South (98.19) and West (96.63).

Weekly earnings growth (2.90%) increased again in April to its highest level since May 2024 (2.92%) as one-month and three-month annualized growth reached above 4%. The number of hours worked also increased. 

“We saw that again go up for the second consecutive month,” said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex. “It’s only happened a couple of times in the last five years.”

He sees that as a leading indicator that bodes well for more hiring. He also pointed to the latest Job Openings and Labor Turnover Survey that was released by the U.S. Bureau of Labor Statistics on Tuesday, which showed hires increasing to 5.6 million while total separations changed little at 5.4 million, including 3.2 million quits and 1.9 million layoffs and discharges. 

“The JOLTS report yesterday had some encouraging potential small-business hiring planned this spring and summer,” said Fiorille. “The mosaic looks like April was pretty good, and hopefully will continue to be maintained.”

However, wage growth has remained below 3% for 18 months, and he expects that will continue for the foreseeable future, unless something happens that would drive a dramatic increase in wages. 

Construction hiring seems to be making a comeback, as the ADP monthly employment report also indicated. “That is a big driver of other second and third derivative impacts on more jobs and more hiring and more companies starting up,” said Fiorille. 

He attended an event Monday in Washington, D.C., for National Small Business Week where President Trump and officials from the Small Business Administration handed out awards to small businesses in each state. 

“The belief in the room was that some of the tax policies are really helping them,” said Fiorille.  “It’s kind of a tailwind for them. They’re not only happy about it, but they think it’s really going to help them, whether it’s increased shifts or staff or whatever. They were very bullish overall.”