San Francisco – November 03, 2026 -- U.S. small businesses added an estimated 38,000 net new jobs in October on a seasonally adjusted basis, topping the 12-month average of 34,000 and extending positive hiring to a ninth consecutive month, according to the Gusto Small Business Jobs and Pay Report.
Hiring accelerated for a second straight month. September was revised down to 27,000 jobs from an initial 28,000. October's gain is the largest since July.
Hiring broadens across 16 of 19 sectors and all four regions
Health Care and Social Assistance led all sectors for a ninth straight month with 13,000 net hires. Professional, Scientific, and Technical Services followed with 5,500, then Construction with 3,800 and Other Services with 2,600.
Only three sectors shed jobs, each by fewer than 300: Mining, Accommodation and Food Services, and Management of Companies.
The South led regional hiring for the ninth straight month with 13,000 net hires. The Midwest added 9,400, the Northeast 8,200 and the West 7,000.
Mid-sized small employers with 20-49 workers retake the lead
Businesses with 20-49 employees added 15,000 jobs, regaining the top spot after the 5-9 employee tier led in August and September. The 5-9 tier added 12,000, the 10-19 tier 7,900 and the smallest firms, with 1-4 employees, 3,600. All four size tiers were positive.
Average hourly earnings rise 3.9% to $37.50 while starting pay lags at 3.0%
Average Hourly Earnings across small business workers reached $37.50, up 3.9% year over year and little changed from September's 4.0%. Wage growth has ranged from about 3.9% to 4.6% for much of 2026.
The New Hire Pay Index, which tracks starting pay for new workers, rose 3.0% to about $25.90 an hour. That is below the pace for the overall workforce.
The West posted the fastest regional wage growth at 5.0% and the highest average hourly earnings at $42.00. The South matched the national rate of 3.9%, and the Northeast came in just below at 3.8%. The Midwest trailed at 3.2%, with average hourly earnings of $33.00, the lowest of the four regions.
Recent monthly gains show volatility, with August revised up to 25,000
Recent monthly net hires were 36,000 in June, 40,000 in July, 25,000 in August and 27,000 in September. August was revised up from 18,500. Gusto cautions that the latest months remain subject to revision as more payroll data arrives.
Nich Tremper, Senior Economist at Gusto, described October as "a step up in pace, but not quite a return to the pace we saw in spring."
Gusto weights a 100,000-business sample to national small business benchmarks
The report draws on anonymized payroll data from a stratified random sample of roughly 100,000 U.S. businesses with 1-49 employees. The sample comes from more than 500,000 companies on Gusto's platform. Gusto weights it to the national distribution of small businesses by industry, size and region using Bureau of Labor Statistics Quarterly Census of Employment and Wages data, then adjusts for company age using Census Bureau Business Dynamics Statistics.
Figures are seasonally adjusted with the Census Bureau's X-13ARIMA-SEATS methodology. The New Hire Pay Index is a three-month rolling average.