Thursday, March 5, 2020

Philadelphia Tops the Country on Monthly Small Business Hiring Index

by Ricahrd Lawson Costar News
Philadelphia bumped Phoenix out of the top spot on a monthly index that measures small business job growth.

A year ago, the City of Brotherly Love’s metropolitan area sat next to last on the index from payroll company Paychex and analytics company IHS Markit. Since then, the area has surged on the index by 2.76%, pushing Phoenix to third behind Tampa.

Though growth is strong, Philadelphia finished just shy of a 100 rating, which means small business job growth for all metropolitan areas is at a slower pace than the benchmark year in 2004.

Tennessee retained the top spot among the 20 most populous states, driven largely by growth in the Nashville area, which isn’t populous enough yet to put it in the top 20 for cities. Tennessee is followed by Florida, Virginia, Pennsylvania and Texas in the top 5 on the March index.

Paychex culls data from the payrolls of 350,000 of its clients that employ 50 or fewer people. Real estate investors look at job and wage data when deciding on the best places to put their money.

Overall, the index showed a slight uptick in hiring across the country as a whole for the third consecutive month. Martin Mucci, Paychex’s president and chief executive officer, said in a statement that the “results have yet to reflect any impact from cases" of the coronavirus, known as COVID-19, "which is expected to increase in the coming months.”

Small business hiring in the Philadelphia metropolitan area, which includes parts of New Jersey, has finally caught up to an area economy that has been doing well over the past few years, Jim Diffey, chief economist for Boston-based IHS, told CoStar News.

“For a while, I was shocked at how low they were performing,” Diffey said. “The readings a few years ago were too pessimistic.”

He said there are a lot of cranes in the Philadelphia area like a lot of cities around the country. Construction is a big with small business hiring.

Determining the breadth of businesses is more challenging. But the latest figures from the U.S. Bureau of Labor Statistics show that financial activities and professional and business services are the two sectors that have been growing the most between July and December of last year.

“Many outside investors aren’t aware that among the largest 15 metro areas in the U.S., Philly is near the very top of the list in terms of growth in college educated residents moving into its urban core,” said Adrian Ponsen, CoStar’s director of market analytics, based in Philadelphia.

He said that is “supporting a booming restaurant and entertainment scene in and around Center City Philadelphia, which has been one of the key contributors to small business growth.”

Plus, Philadelphia has a relatively low cost of living, he said. That is “increasingly attracting new residents, including entrepreneurs seeking relief from more cost prohibitive cities nearby such as New York and Washington, D.C., while fewer and fewer Philly residents are moving in the opposite direction every year.”

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