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BRIEFING - MARCH EMPLOYMENT SITUATION

April 04 2008

·   Temp jobs off 22,000
·   Nonfarm jobs off 80,000
·   Unemployment trending up
·   Place and search prospects tepid

Temp job losses widen
Temporary help payrolls fell by 22,000 jobs in March, according to the U.S. Bureau of Labor Statistics. This was not quite as large a decline as in February but nonetheless constituted the 14th month of decline out of the last 15 months. On a year-over-year basis, temporary help payrolls were down 4.5%, representing a continued acceleration in the year-over-year rate of decline. Temporary help penetration slipped to 1.83%.

According to recently reported 4Q07 data from the Staffing Industry Benchmarking Consortium - which in aggregate represents 22% of the temporary staffing industry - the strongest area of temporary staffing at the moment is engineering/design, which scored both the highest growth in the fourth quarter and the highest projected growth for 2008.

Nonfarm jobs down again
According to the BLS, nonfarm payrolls fell by 80,000 jobs in March, the third month in a row of job loss. One of the largest declines by sector was in employment services, which reported a reduction of 42,000 jobs, reflecting the aforementioned loss of 22,000 jobs in temporary staffing and another 20,000 jobs lost in other areas (the BLS reports these other sub-categories on a month-delayed basis).

Additionally, the BLS restated downward the February jobs number by an additional 67,000, making total losses for the first quarter of 232,000.

Job creation weakened versus the last twelve-month average across all major sectors except two: natural resources and mining, which is scoring a mini-boom in oil-related activity, and financial activities, where the month's job loss of 5,000 represented a slowing from the twelve-month average loss of 9,000 jobs. Interest-rate cuts may finally be playing out for that sector.

The biggest negative swing factors were construction, manufacturing and professional services. Losses in construction and manufacturing combined were roughly double the usual rate and professional services lost 35,000 jobs (reflecting the downturn in employment services), as compared to an average monthly gain over the last year of 13,000.

The estimated job losses reported by the BLS this month and year-to-date are significantly bleaker than those released either by Automatic Data Processing (ADP), in its ADP National Employment Report or the Household Employment Survey.

This month's ADP report, which is published in advance of the BLS numbers, estimates job gained in March at 8,000 jobs and job creation year-to-date of 109,000. The report adds "Unlike the weakness of employment reported in February, which was widespread across businesses of all sizes and apparent in all major sectors of the economy, the weakness of employment in March was concentrated among larger businesses in the goods-producing sector."

According to the ADP data, significant job growth is still occurring particularly among small and mid-size services companies. The household employment survey also reported a smaller March loss than the BLS, at 24,000 jobs cut in the month.

Unemployment rising
Unemployment in March was 5.1%, still low by historical standards but nonetheless its highest level since 2005. Unemployment is rising in particular at the low-end of the skills range. Among those with less than a high school diploma, the rate rose 90 basis points to 8.2%. Among college grads, it held steady at 2.1%.

Initial unemployment claims averaged 358,000 in March, up from 348,000 in February. Over the course of March such claims trended up, with claims in the last week (ending March 29) of 407,000.

States reporting large increases in unemployment claims in the latest week included Pennsylvania, Wisconsin, Georgia and New York; states reporting large declines included Michigan, Ohio, North Carolina, Texas, Missouri and Indiana.

The increase in Pennsylvania's unemployment claims, the largest increase of any state, were attributed to layoffs in the electrical equipment, public administration, food, and transportation industries. The decline in Michigan's unemployment claims, the largest decline of any state, were attributed to reduced layoffs in the auto industry.

Place and search prospects tepid
Employment at placement agencies was down 1.2% from the previous year. Similarly, employment at executive search agencies was down 2.3%. On the plus side, these declines are relatively small compared to the declines reported in the previous year.

Unemployment among college graduates remained at 2.1%. Historically, college level unemployment rates of less than 2.0% have been correlated with strong growth in place and search, but as such rates exceed the 2.0% mark, place and search growth becomes less certain.

Latest data from the Staffing Industry Benchmarking Consortium indicates that direct hire growth continued to decelerate into the fourth quarter, scoring just 2% growth versus the previous year, this sector's worst performance in nearly four years.


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