A big US payroll processor has good news ahead of Friday's jobs report

Paychex (PAYX), the second largest payroll processor in the U.S., reported a strong third quarter report on Wednesday with revenues rising 7% to $753 million.  The company, which has 590,000 clients and pays one out of every 15 American private sector, focuses mostly on small businesses, which represent nearly 95% of all employers in the country.

This past quarter, checks per client--which measures the pace at which Paychex clients are adding new workers--moderated slightly. However, the management said it remains positive on growth ahead and noted that some of the recent slowdown was due to temporary noise from bonus checks.

Additionally, CEO Marty Mucci said on the company’s conference call that he remains positive on the creation of new businesses, which makes up 50% of the company’s small business payroll sales. This business grew 7% in the company’s latest quarter.

And the smallest businesses are exhibiting notable strength.

“We saw the best three-month increase in the job growth rate for small businesses under 50 in two years,” Mucci said on Wednesday’s conference call. “So we think that small business hiring, you know, job growth is on the upswing right now...So we’re pretty optimistic about it...We’re definitely seeing some optimism in the job growth rate.”

Mucci believes all of this bodes well for broader measures of job growth, like the nonfarm payrolls report, which will be released on Friday.

“I wouldn’t be surprised to see a jobs report over 200,000,” Mucci told Yahoo Finance.

Wednesday’s ADP report showed an increase in 200,000 workers and the March jobs report on Friday is predicted to show a 205,000 gain with the unemployment rate holding at 4.9%.