Read our full analysis for a more in-depth look at these trends.
Small Business Checkpoint
As small businesses face increasingly tight profit margins, payroll spending growth is beginning to slow.
July 2023
Key takeaways
- With labor market conditions remaining a focal point of the economy, Bank of America internal data suggests that small businesses continue to spend on payrolls in June, although at a slower pace than the beginning of the year. With wage inflation still high, this moderation has likely been driven by slower hiring.
- Small businesses in the lodging and restaurant sectors have seen the strongest payroll payments growth through 2023, underscoring the relative strength in leisure services. Meanwhile, payroll spending was weakest in finance, insurance, and real estate, reflecting early signs of softness in higher-income industries.
- Besides payroll spending, total payments per small business client contracted by 3% year-over-year (YoY) in June. This is no great surprise, as businesses face increasingly tight profit margins: according to Bank of America internal data, the ratio of inflows to outflows in small business checking and savings accounts dropped below 1 last month — the lowest June reading in five years.
Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.
