Small business hiring increased in February, according to payroll giant Paychex, following a gain in January.

The Paychex | IHS Small Business Jobs Index, which Paychex releases every month with the research firm IHS, stood at 100.75. The Mountain region remains the top-performing part of the country in the index, while Washington retains the top spot among states for the second consecutive month.

Dallas maintained its top ranking among metropolitan areas, while Seattle holds second place with another strong month. “Other Services (except Public Administration),” as defined by the U.S. Bureau of Labor Statistics, ranked as the top industry sector, followed by construction, which had the best one-month growth rate among the various industry sectors.

“We’ve seen a pretty good increase the past two months, and over the last three months the index is up 0.33 percent,” said Paychex president and CEO Martin Mucci. “That basically wipes out all of the decrease we saw in the job growth rate during the last part of 2015.”

Seven out of nine regions of the U.S. showed positive job gains over the past month, he noted, and in 16 out of 20 states, the improvements were broad based among industries.

The Mountain region continues to hold the lead among regions, with an index level of 101.94, up 0.79 percent year-over-year. Following the Mountain region, the top-ranked regions are all three southern regions and the Pacific, consistent with the strong general job growth in 2015-2016 in the Sun Belt. With strong gains in recent months, the South Atlantic region is up 0.58 percent from November, the fastest three-month growth rate since 2012. The West North Central is now the lowest ranked region at 99.93, and also had the lowest one-month and 12-month growth rates, probably due to declining oil prices.

Texas gained 0.21 percent from January to February on the index, yet still managed to drop two spots to fourth place among states due to strong gains in Tennessee and Florida. According to the U.S. Bureau of Labor Statistics, Tennessee and Florida ended 2015 with very strong gains in terms of total jobs. At 103.52, Washington experienced a one-month increase of 0.36 percent in February and remains the top-ranked state index. After falling below 99 in November 2015, Virginia has shown positive growth for four straight months and is back over 100 for the first time since June 2015. While a majority of states started 2016 with positive growth rates, employment gains in Massachusetts slowed further in February as its index fell below 100.

“Washington State is very strong, and we’re seeing the best improvement in the southern corner of the country,” said Mucci. “The state of Florida moved up as well as Tennessee, and you’re seeing places like Miami and Tampa Bay be strong.”

Seattle had a one-month gain of 0.50 percent in February and remains in second place among metropolitan areas at 103.58. Still the top-ranked metro area, Dallas increased just 0.09 percent to 105.77 after the steep drop-off in January. Miami hit a new record pace of small business employment growth as its index increased 0.40 percent from the previous month to 102.21. New York City is up 1.25 percent during the past year and moved up to the 10th ranked metro area in February.

The construction industry saw more employment gains in February, the fifth in the last six months, moving up 0.37 percent from January to 102.49. The education and health services sector ranks third among industries as its index climbed above 101 for the first time in two years. Other Services (except Public Administration) hit another new record high in February at 104.85 as small business employment growth continues to outpace other sectors. Manufacturing employment slowed 0.48 percent from the previous month as its index level fell to 98.99, the lowest among industries.

“Construction is up, particularly in the South,” said Mucci. “The values are coming back in housing. Leisure and hospitality is also up. Probably most of that is part-time work. That’s where we’re seeing the biggest increase, over 3 percent, over the last two years for the part-timers.”

Among the issues facing accountants and their small business clients are proposed increases in the minimum wage and regulations governing paid sick leave.

“For accountants, regulatory compliance continues to be a big issue that they can assist their small businesses with,” said Mucci. “A big bump in the minimum wage is being proposed in a number of cities and states and the federal government. Paid sick leave is a big issue that seems to be very hot right now. Accountants could help small businesses prepare for what it looks like if you hire now and the minimum wage goes up in your area, and what if you had to offer paid sick leave. These things seem to be gaining a lot of momentum.”


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