After a higher-than-expected jobs report in February, the Fed repositioned itself to continue raising rates through 2023 to curb inflation.
Our data from the US and Canada show a slight decline in key employment measures in February – and notably, a sharp decline in wage inflation.
Higher-than-expected non-farm payrolls added in February renewed interest in the Federal Reserve’s immediate plans to raise rates in an effort to put the brakes on an overheated economy. As with previous iterations of this report, Homebase seeks to understand how the broader economic environment affects small businesses and their employees through the beginning of 2023 by analyzing data on -behavior from over two million employees working in over one hundred thousand SMBs.
Summary of findings: February saw a slowdown in hours worked and employees employed, across most industries and major metro areas
- Key indicators were relatively flat in the first 2 months of 2023; compared to the same time period last year, we are not seeing the monthly growth we saw at the same time in 2022.
- Key indicators were relatively flat in the first 2 months of 2023; compared to the same time period last year, we are not seeing the monthly growth we saw at the same time in 2022.
- We see relatively low month-to-month variation in economic performance across metro areas, with the average MSA experiencing declines in key employment metrics.
- Wage inflation, while still positive, reached its lowest point since October 2021.
Employment in February grew more slowly than in previous years
After a strong January, February saw a sharp decline in job growth. Homebase data also showed declines in hours worked for employees
Working employees
(Monthly change in 7-day average, relative to January of the reported year)
Businesses are open
(Monthly change in 7-day average, relative to January of the reported year)
Source: Homebase data.
Most industries saw a decline in employment, with Hospitality and Entertainment being the outliers
After a strong start to the year, major industries declined in February. Entertainment, food and beverage, and hospitality are still up compared to employment in December.
The job metrics are down nearly 1% for the retail sectorwhich has seen a significant slowdown in recent weeks
Percentage change in employed employees
(Mid-February vs. mid-January, using Jan. ’19 and Jan. ’23 baselines)1
1. February 17-23 vs. January 13-19 (2019) and February 19-25 vs. January 15-21 (2023). The pronounced decline usually coincides with major US Holidays. Source: Homebase data
Regions fared differently in February, with weather and seasonality driving some of the differences
Note: February 19-25 vs. January 15-21. Source: Homebase data
February saw wage inflation hit its lowest level since 2021
Wage inflation
Monthly change in average hourly wages
Employee
Pulse Check
A February pulse survey of about eight hundred employees shows a consistent, positive view of job prospects.
Employees see their job prospects improving in the coming year
Most employees surveyed see their job prospects improving (40%) or staying the same (35%) in a year, while only 6% think they will have worse options than they do now. This represents a slightly less negative outlook compared to mid-2022, and increased uncertainty compared to the beginning of last year. With inflation at the forefront of many minds, small business workers remain confident that they will continue to have options where they will work in the future.
Survey question: Do you think your job options will be better, about the same, or worse in 12 months compared to now?
Origin: Homebase Employee Pulse Survey. N = 873 (Feb. 2023)
Nearly 25% of employees plan to look for a new job in the coming months
Although most workers are generally happy with their jobs, this does not mean that they plan to stay at their current jobs for a long time; Only 57% of workers surveyed had no plans to look for a new opportunity in the next 6 months, even though 78% reported being happy in their jobs. As the job market remains hot, small business employees are aware of the choices before them.
That said, our October survey found that 48% of employees said they don’t plan to look for a new job in the coming year, indicating that economic fears are fueling retention compared to previous months.
Origin: Homebase Employee Pulse Survey. N = 873 (Feb. 2023)
Inflation isn’t just something economists talk about – it’s also a major concern for workers
Of all the issues facing employees – on and off the job – only inflation was cited as a concern by the majority (64%) of those surveyed. Workers feel secure about their jobs and the hours available to them, but worry about how far their salaries will go for them in an inflationary environment.
Origin: Homebase Employee Pulse Survey. N = 873 (Feb. 2023)
In the face of inflation, wages remain a top priority for workers
It should come as no surprise that the biggest factor in which respondents decided to work was salary, as 54% cited salary as the top 3 factors in their employment decisions. Employer-sponsored benefits and upskilling are close behind, indicating that employers need to invest in their workforce to attract and retain talent.
Origin: Homebase Employee Pulse Survey. N = 873 (Feb. 2023)
For a PDF of our February report, please see below; if you choose to use this data for research or reporting purposes, please credit Homebase.