According to Paychex’s January Small Business Employment Watch, the Small Business Jobs Index for firms with fewer than 50 employees rose by 0.04 percentage points to 99.30, marking a modest but notable uptick from December’s reading. This represents a 0.03-point gain over the previous quarter and underscores a continuation of steady hiring activity among smaller employers. While overall national payroll growth has moderated from the peaks seen in early 2025, the Index’s persistently elevated level suggests that small businesses continue to add headcount at a measured pace, even as they contend with inflationary pressures and wage competition.

Hourly earnings for small-business workers held flat at an annualized rate of 2.68% in January, roughly in line with readings since mid-2025 and below the three-percent threshold that would signal accelerating wage pressures. Weekly earnings growth decelerated slightly to 2.53%, while the one-month annualized weekly rate slipped to 1.62%, its third consecutive month below two percent—a phenomenon not seen since late 2020. These muted wage gains suggest that, despite tight labor markets, small employers have so far managed to contain compensation costs, potentially limiting upward pressure on inflation.

The Midwest maintained its streak as the top-performing region for small business employment growth, leading all areas for the 20th straight month. On the sector front, Education and Health Services reported the strongest jobs index reading at 100.57, extending a nearly five-year run of headline-leading gains. Together, these trends point to persistent pockets of strength in industries less susceptible to cyclical downturns and in geographic markets where labor supply constraints have eased slightly relative to coastal metropolitan centers.

In its latest 13F filing, AE Wealth Management LLC revealed a 222.4% increase in its position in Paychex, adding 8,385 shares for a total holding of 12,156 shares at quarter-end. The firm’s Paychex stake is valued at approximately $1.54 million, reflecting confidence in the company’s near-term growth prospects and cash flow stability. This move contrasts with more modest adjustments by other institutions: Brighton Jones LLC and Empirical Finance LLC both added less than one percent to their holdings, while GPS Wealth Strategies Group disclosed a 40.6% increase. Overall, institutional ownership accounts for more than 83% of Paychex’s outstanding shares, underscoring the stock’s prominence in professional portfolios.