Event: In today’s generally favorable monthly jobs report from the US Bureau of Labor Statistics (BLS), total nonfarm employment rose by 4.8 million in June on a seasonally adjusted basis. This was the greatest monthly rise on record (going back to 1939), breaking the record set in May of 2.7 million (after a record loss of 20.8 million in April). Temporary help services also posted its largest gain on record (going back to 1990) of 149,000 jobs in June, two months after its record decline of 841,000 jobs. The temporary agency penetration rate rose from 1.58% in May to 1.63% in June, but still below its pre-COVID level of 1.9%. The national unemployment rate declined for the month, from 13.3% to 11.1%, even with a rise in the labor force.
14 of the 15 major industry groups gained jobs for the month (the exception being natural resources/mining with a loss of 10,000 jobs. A majority of the 4.8 million total jobs gained came from just two categories: leisure & hospitality (+ 2.1 million) and retail trade (+ 740,000). Despite having the largest job gain for each of the last two months, leisure and hospitality still shows the steepest year-over-year (y/y) percentage decline (-27%). The second steepest is in temporary help (-24%). All of the fifteen major industry groups are down y/y, the closest to a complete rebound are financial activities (-1%) and construction (-4%).
BLS Revisions: The change in total nonfarm payroll employment for May was revised from 2.5 million to 2.7 million. April was revised from -20.7 million to -20.8 million. With these revisions, total nonfarm employment change was 90,000 higher than previously reported. The change in temporary help services employment for May was unchanged; April was revised upward by 7,800 jobs.
Staffing Industry Analysts’ Perspective: Despite a 6% rise over the last two months, total nonfarm employment stands 10% below its peak from February of this year. As long as recent rises in COVID-19 cases don’t force a return of shelter-in-place restrictions, we should continue to see recovery in the coming months. The number of unemployed persons on temporary layoff declined by 4.8 million (the reciprocal of job gains for the month), but 10.6 million remain, suggesting a large number of people returning to work in the coming months.
However, the number of permanent job losers continued to rise, by 588,000 to 2.9 million in June. As businesses re-open after shelter-in-place regulations, we should continue to see substantial job increases, but some businesses will not re-open, or at least not to the same capacity. Thus, once we recover 60%-80% of the April losses, gains will likely come much slower as they may be driven more by new companies replacing old companies from the pre-COVID world, rather than by businesses re-opening. Temporary agency jobs will likely mirror this trend.
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