In a Tuesday interview with CNBC’s Jim Cramer, Paychex CEO John Gibson suggested small businesses are persevering despite an uncertain economic landscape and cited his company’s report about employment data over the last month.
“We just reported our jobs report a few hours ago, and the labor market for small businesses continued to have a very slight change to what we’ve seen all year,” Gibson said. “Stable job growth, wage inflation continues below 3%, and there’s really no signs of recession. We continue to see strong demand for our solutions — which are all indicating to me that small businesses are resilient in this economy.”
Paychex provides services to small and medium-sized businesses, such as human resources and payroll. The company beat Wall Street’s expectations when it reported on Wednesday and managed to raise its full-year earnings outlook. However, shares slipped during Tuesday’s session, and the stock was down 1.38% by close.
According to Gibson, the company’s optimism was driven by its earnings success, progress on the integration of its recent acquisition, Paycorp, along with a seemingly stable small business employment market.
Gibson said smaller business owners have more clarity about the future than just a few months ago because President Donald Trump’s megabill passed, and they now know more about taxes credits for the next year. He also said these businesses were heartened by the Federal Reserve’s decision to lower the benchmark borrowing rate, saying the cut is a sign for owners that “there may be some relief from an interest rate perspective.”
Gibson also touched on what a government shutdown means for small businesses, saying he’s doesn’t think there will be any “wholesale, major issues” as long as the shutdown does not last for a long time. However, he suggested the shutdown would affect “pockets” of the market, such as restaurants and other businesses in Washington, D.C.
“Now, if we get into something that’s long term, we’ll have to reevaluate,” Gibson said. “But, again…I don’t see that as being a big factor at this point in time.”
