Temp jobs off 29,000
Temporary help payrolls fell by 29,000 jobs in July, the 18^th monthly reduction in temp jobs out of the last 19 months.  Additionally, the BLS restated downward the temp payroll estimate for June by 6,200 jobs.  On a year-over-year basis, temporary help payrolls were down 8.0%, the largest year-over-year decline since 2002.  Temporary help penetration slipped to 1.74%, its lowest level since 2003.

Second-quarter public company staffing firm earnings reports released so far paint a picture of sharply weaker performance for professional staffing, particularly for information technology.  Commercial staffing remains weak as well, but the situation for commercial remains stable with some firms even hinting at improvement. Although data from the Staffing Industry Benchmarking Consortium for second quarter is only beginning to come in, preliminary results indicate industrial temporary staffing to be down only slightly and office/clerical to be down in the upper single digits.

Non-temp jobs on recovering trend
According to the BLS, nonfarm payrolls fell by 51,000 jobs in July, the seventh month in a row of job loss, but a moderating rate of loss compared to earlier in the year.  Additionally, the BLS restated upward by 26,000 the nonfarm payroll number for June. 

It's particularly notable that temporary staffing made up a majority of the nonfarm job loss both this month and the last.  Of the 51,000 nonfarm jobs lost in July, temporary staffing losses accounted for 57%.  Adjusting total nonfarm jobs to exclude temporary jobs reveals that non-temp job losses have actually been diminishing over the course of the year, as can be seen in the chart below.

Areas of the economy seeing significantly improved job performance in July (decreased job loss or increased job creation) relative to previous twelve month performance were construction, financial activities and natural resources/mining and financial activities.  Construction lost 22,000 jobs, markedly lower than its twelve month average loss of 38,000.  Financial activities lost no jobs, as compared to its average loss over the last twelve months of 10,000 jobs.  And natural resources/mining gained 11,000 jobs, nearly triple its twelve month average of 4,000.

The area of the economy seeing the sharpest deterioration in job performance was professional services, which includes temporary staffing.  Professional services lost 24,000 jobs as compared to its twelve month average loss of 3,000.  Other areas seeing significantly reduced performance were wholesale trade, information and leisure & hospitality.

In absolute terms, the largest job losers of the month were manufacturing, professional services and construction.  The largest job gainers were education & health, government and natural resources/mining.

Automatic Data Processing (ADP), which produces an independent U.S. payroll estimate, measured a payroll job gain in July, at 9,000, with gains in service jobs at small and medium-sized companies offsetting losses at all size levels of goods producing businesses.  The ADP and BLS payroll estimates, which historically have moved together to some degree, have been diverging throughout 2008.  ADP estimates jobs created year-to-date of 74,000.  This compares with the BLS estimate of jobs lost of 463,000, a gap of more than half a million.

The BLS estimate of total U.S. jobs in July, of 137,615, is nearly equal to its estimate of June a year earlier, of 137,682, indicating essentially no job growth in total over the last twelve months.

College-level unemployment rises to 2.4%
College-level unemployment rose to 2.4%, its third month in a row of increase, and the highest level since 2005.  This marker is very significant both for professional staffing and direct hire, both of which are driven in part by skilled labor shortage.  Continued increases in this rate could be a material damper on demand for staffing services related to higher-skilled occupations.

General unemployment rose to 5.7%, up from 5.5% in June.  Although this represents the highest level of general unemployment since 2004, it remains moderate by historical standards.

Place & search continuing to cut staff
Employment at placement agencies was down 5.4% from the previous year, the largest year-over-year decline since 2006.  Employment at executive search agencies was also down 5.9%.  These declines represent a continued sharp acceleration in internal staff reductions, which had lately been more in the 1% to 3% range.  Unemployment among college graduates rose to 2.4%, its highest level since 2005.  The leap in college-level unemployment over the last two months is troubling.  Historically, higher rates of college level unemployment have been consistent with materially reduced performance in the place and search sector.