The latest data from the Paychex Small Business Employment Watch shows a stable outlook for U.S. small businesses heading into the second half of 2026. Job growth among firms with fewer than 50 employees remained steady in July, landing slightly above the average seen during the first half of the year. This suggests that smaller organizations are maintaining their current headcounts and keeping operations predictable.
While hiring remains measured, there is a clear trend regarding worker productivity. Growth in weekly hours worked reached 0.40 percent in July, hitting its highest point in over five years. This indicates that business owners are leaning on their existing staff to handle demand rather than rushing to bring on new hires.
Financial data reflects this shift in operational strategy. Weekly earnings growth reached 3.14 percent in July, the strongest performance since late 2023. Even as hourly earnings growth remains under three percent, the combination of more hours and consistent pay shows that small business owners are prioritizing output and stability.
John Gibson, president and CEO of Paychex, noted that these signs point to a productive community focused on growth. Manufacturing remains a notable standout, recording the strongest sectoral changes across one, three, and 12-month periods. Overall, the data confirms that small businesses are choosing to navigate the current economic environment by maximizing their current workforce.