(Reuters) - Payroll services provider Paychex (NASDAQ:PAYX) reported its slowest rise in quarterly revenue in over two years on Thursday, hurt by tepid spending by businesses and a slower pace of hiring, sending its stock down 6%.
Shares of the Rochester, New York-based company fell to $120 in early trading.
The number of Americans filing new claims for unemployment benefits increased moderately last week, according to a report from the U.S. Labor Department, suggesting weak demand in the labor market.
An uncertain macroeconomic environment has also dampened demand for Paychex's HR platform among small and medium businesses.
Small and mid-sized businesses continue to struggle "in both the cost of and access to growth capital; and finding quality talent in the current labor market," said CEO John Gibson.
The company's results contrast with those of peers like Workday (NASDAQ:WDAY), which raised its annual subscription revenue forecast in November. Payrolls processor Automatic Data Processing (NASDAQ:ADP) also reported upbeat results.
Paychex's revenue in the second quarter ended Nov. 30 rose 6%, to $1.26 billion, according to LSEG data.
Net income rose to $392.7 million, or $1.08 per share, in the second quarter, from $360.3 million, or 99 cents per share, a year earlier.