Payroll service provider Paychex is seeing signs of improvement in employment at small businesses in the first six months of 2014, although it has also found a slight drop-off in the past two months.

The Paychex | IHS Small Business Jobs Index grew 0.23 percent in the 12 months leading up to June, the company reported Tuesday. While the national index decreased for a second straight month to 101.07, it remains near its record high.

“With the first six months of the year behind us, we continue to see a positive trend in small business employment growth,” said Paychex president and CEO Martin Mucci in a statement. “Even though the growth rate has slowed slightly over the past two months, the consistent growth in key regions, states, and metro areas is an encouraging sign.”

Although the Paychex | IHS Small Business Jobs Index nudged down again in June, to its lowest level since January, the index remained over 101 for the sixth consecutive month. The 101.13 average for the first half of 2014 compares favorably to the 100.71 average for the last six months of 2013.

“Though the pace of gains remains moderate, the Paychex | IHS Small Business Jobs Index shows that payroll conditions have clearly improved this year for the country’s small businesses,” said James Diffley, chief regional economist at IHS, in a statement.

Among the various states, Washington state again leads the index among the states, while Arizona continues to show strong improvement in small business employment growth.

Washington leads all states in the Small Business Jobs Index at 103.24, with Wisconsin, Indiana and Texas also above 102 in June. With a one-month growth rate of 1.02 percent, the Indiana index jumped seven spots to the number three ranked state. Arizona’s small business employment conditions advanced further in June, increasing 0.58 percent during the past month and 2.87 percent over the past year. At 101.06, the Arizona index jumped to its highest level since early 2007.

Dallas ranked as June’s top-performing metro area, surpassing San Francisco, Seattle and Houston.
At 104.02, Dallas topped all metro areas in the Small Business Jobs Index in June as the one-month growth rate spiked 1.07 percent. San Francisco and Seattle rounded out the top three with levels above 103. For the third consecutive month, Tampa Bay, Baltimore and Washington were the only metro indices below 100.

In terms of different regions of the country, the Mountain region continues to lead in year-over-year gains at 1.77 percent, while the Middle Atlantic region once again showed the weakest growth, declining 0.39 percent during the past 12 months through June. After falling four out of the five months to begin 2014, the East South Central region had the best one-month growth rate, advancing 0.41 percent in June.

For more information, visit the Small Business Jobs Index site and the June 2014 infographic.