Hourly wages at US small businesses rose 4.95% year over year in December, according to the recently released Paychex | IHS Markit Small Business Employment Watch covering businesses with fewer than 50 workers. December’s growth rate was the lowest since March 2022.

“The Paychex | IHS Markit Small Business Jobs Index flattened in December, following nine months of moderation. Additionally, small business hourly wage growth is starting to slow as the Fed takes measures to fight inflation," said James Diffley, chief regional economist at IHS Markit.

Separately, Paychex | IHS Markit’s Small Business Jobs Index remained unchanged in December from November’s reading of 99.38.

Other findings:

• Florida witnessed the highest hourly earnings growth among other states at 6.44%, followed by Missouri and Texas, both of which saw growth above 6%.
• Leisure and hospitality continue to rank first among sectors in hourly earnings growth (6.75%) and last in weekly hours worked growth (-0.52%). Leisure and hospitality was the only sector to report an increase in hourly earnings growth from November to December.
• At 4.08%, education and health services reported the weakest hourly earnings growth for the 15th consecutive month.
• Miami tops metros in both hourly earnings growth (6.61%) as well as weekly earnings growth (6.27%).
• San Francisco ($39.45/hour) and Washington ($38.73/hour) have the highest hourly rates among metros by a wide margin but rank in the bottom three for growth in December. Weekly earnings growth in Detroit slowed to 3.09%, weakest among metros.

The Paychex report draws payroll data from approximately 350,000 clients with fewer than 50 employees. It analyzes national employment and wage trends and examines regional, state, metro and industry sector activity.