The Paychex Small Business Jobs Index fell to 98.77 in February 2026, down -0.53 MoM and -1.27 pts YoY, indicating a slowdown in small business hiring momentum below the 100 baseline.

• The national index reading of 98.77 reflects continued moderation in employment growth, with the YoY decline of -1.27 pts highlighting a weaker pace compared to February 2025 and signaling softer small business labor conditions over the past year.

• The Midwest remained the top-performing region for the 21st consecutive month, though it slowed -0.57 pts to 99.28 in February, suggesting it continues to lead other regions despite easing growth.

• The West posted a reading of 98.16 and has been the weakest region for the past 12 months, underscoring a prolonged period of comparatively slower small business employment growth in that region.

• At the state level, Indiana (100.29) reclaimed the top ranking and has remained above 100 for six consecutive months, while Missouri (100.14) and Georgia (99.85) followed, with Georgia noted as the only state showing positive one-, three-, and 12-month change rates in February.

• Maryland declined -1.81 pts to 96.99, making it the weakest-performing state in the release, and seven of the 20 states analyzed slowed by more than -1.0 pt, with Tennessee posting the largest monthly drop at -2.16 pts.

• Financial Activities rose to 99.90 and overtook Education and Health Services (99.78) as the top-ranked sector, marking the first time in five years Financial Activities has led, while Education and Health Services fell below 100 for the first time in nearly five years, ending its streak of consistent job gains.

• Construction dropped -1.11 pts to 97.96 in February, representing the sector’s largest one-month decline since April 2023 and contributing to the broader softening in small business employment growth.

Hourly earnings growth rose to +2.78% YoY in February, up slightly from January and remaining below 3% for a 16th consecutive month, while weekly earnings held at +2.62% YoY and weekly hours worked declined -0.24% YoY, indicating continued moderate wage gains alongside soft labor utilization trends.

• Weekly earnings growth was steady at +2.62% YoY, and one-month annualized weekly earnings growth accelerated to +3.46%, its highest since last February (+3.55%), pointing to a short term pickup in momentum despite subdued longer term growth.

• Weekly hours worked fell -0.24% YoY and has been negative in 58 of the past 60 months, underscoring a prolonged period of weak labor utilization even as wage growth remains positive.

• Regionally, the Midwest led with +3.08% YoY hourly earnings growth and has held the top position since August 2025, while the South recorded the lowest regional hourly earnings growth at +2.52% YoY for a ninth straight month.

• The West posted +0.09% YoY weekly hours worked growth, marking its first positive reading since May 2021 and signaling a break from an extended stretch of contraction in hours.

• At the state level, Indiana led with +4.46% YoY hourly earnings growth and +4.20% YoY weekly earnings growth, while Tennessee’s hourly earnings growth rose to +4.30% YoY, attributed to faster wage growth in Trade, Transportation, and Utilities.

• Virginia’s hourly earnings growth slowed to +1.73% YoY, making it the only state below 2%, whereas Maryland’s hourly earnings growth increased to +2.33% YoY after spending all of 2025 below 2%, reflecting a notable improvement over the past five months.

• By sector, Construction recorded the strongest growth in hourly earnings (+3.30% YoY), weekly earnings (+3.36% YoY), and weekly hours worked (+0.32% YoY), while Education and Health Services ranked last in hourly earnings growth at +2.30% YoY and Leisure and Hospitality reported the weakest weekly hours worked growth at -0.66% YoY, with one-month annualized hours down -7.95%.