Event- On a seasonally adjusted basis, total nonfarm employment declined by 20.5 million in April, giving back all job gains since February 2011, according to the US Bureau of Labor Statistics (BLS) in its monthly jobs report. Temporary help services lost 842,000 jobs for the month. These job losses are the worst in reported history (BLS shows total nonfarm employment and temporary help employment going to back to 1939 and 1990, respectively). The temporary agency penetration rate is 1.56%, the lowest since April 2010. The national unemployment rate is 14.7%, the worst in reported history (starting in 1948).
Background and Analysis- All of the 15 major industry groups showed declines for the month. The three biggest decliners for the month were leisure & hospitality (-7.7 million), retail trade (-2.1 million) and healthcare & social assistance (-2.1 million). On a percentage basis, the three biggest decliners for the month were leisure & hospitality (-47%), temporary help (-29%) and retail trade (-13%). On a y/y percentage basis, all 15 industry groups declined; the three largest declines were leisure & hospitality (-47%), temporary help (-31%) and retail trade (-14%).
Average hourly earnings rose 4.7% for the month, as there was a disproportionate loss of low-wage workers.
BLS Revisions- The change in total nonfarm payroll employment for March was revised from -701,000 to -870,000. February was revised from +275,000 to +230,000. With these revisions, total nonfarm employment gains were 214,000 lower than previously reported. The change in temporary help services employment for March was revised from -49,000 to -58,000. February was revised from -3,900 to -6,300. With these revisions, temporary help employment growth was lower than previously reported by 11,400 jobs.
Staffing Industry Analysts’ Perspective- While we are used to thinking of temporary staffing as the shock absorber in US employment, total nonfarm employment is having to absorb a great deal of shock on its own. Not only is its current level of 131 million jobs the lowest since February 2011, but it is lower than some of the peak levels before the 2007-2009 and the 2001 recessions. (BLS reports more employees in the US in February 2000 than for April 2020).
Despite the unprecedented jobs losses, the stock market was actually up today at the time of this writing, suggesting the report was not worse than expected. One piece of positive news from the report is that the percentage of unemployed who reported being on temporary layoff rose from 14% in February (most recent pre-COVID month) to 78% in April. To the extent these respondents are correct in viewing themselves as on temporary layoff, that is a favorable sign for the speed of the recovery.
Given the pace of change from the onset of the pandemic to the beginning of lifting some of the shutdown measures, the change in jobs in April is almost an afterthought. (The establishment survey numbers are actually based on the pay period including April 12th; the reference week for the household survey is April 12th through April 18th). A more timely indicator to watch is the initial unemployment claims, reported every Thursday, another curve we need to see flattened.
As some parts of the country are taking their first steps in easing shutdown measures, temporary staffing may soon see a substantial increase in demand. Staffing firms will want to prepare for that as they endure the current headwinds.
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