Event- On a seasonally adjusted basis, total nonfarm employment declined by 701,000 in March, according to the US Bureau of Labor Statistics (BLS) in its monthly jobs report. Temporary help services lost 49,500 jobs for the month. These job losses are the worst since March 2009 and April 2009, respectively, but only partly account for the recent pandemic. According to BLS, workers who are paid by their employer for any part of the pay period including the 12th of the month are counted as employed in the establishment survey (the survey which BLS conducts to gather all information in this report except the unemployment rate). Across respondents to the establishment survey, 33% have a weekly pay period, about 40% a bi-weekly, about 20% semi-monthly, and a small amount monthly.
Background and Analysis- On a year-over-year (y/y) basis (March 2020 over March 2019), total nonfarm employment was up 1.0%, and monthly job gains have averaged approximately 125,000 over the past 12 months. Temporary help employment was down 2.0% y/y, reflective an average decline of 4,900 jobs per month over the past 12 months.
As is typical in the beginning of an economic crisis, a greater share of temporary staffing jobs than total jobs were lost in March, driving the temporary agency penetration rate (the share of total nonfarm employment made up by the temporary help industry) down from 1.93% in February to 1.91% in March.
Of the 15 major industry groups, 3 added jobs in March: government (+12,000), information (+2,000), and wholesale trade (+900). The three biggest decliners for the month were leisure & hospitality (-459,000), healthcare & social assistance (-61,200) and temporary help (-49,500). The relatively large declines in healthcare & social assistance may be surprising, (a majority of the declines in this group were from child day care and offices of dentists). There was little change in employment at hospitals in March, likely reflecting cancellation of non-critical appointments in anticipation of COVID-related demand not yet in full swing during the reference week.
The national unemployment rate rose from 3.5% in February to 4.4% in March, but the large increase only partly accounts for the recent pandemic. In the household survey, which BLS uses to determine the unemployment rate, individuals are classified as unemployed based on their answers to a series of questions during the survey reference week (March 8th through March 14th).
BLS Revisions - The change in total nonfarm payroll employment for February was revised from +273,000 to +275,000. January was revised from +273,000 to +214,000. With these revisions, total nonfarm employment gains were 57,000 lower than previously reported.
The change in temporary help services employment for February was revised from -3,300 to -3,900. January was revised from -2,600 to -3,900. With these revisions, temporary help employment growth was lower than previously reported by 1,900 jobs.
Staffing Industry Analysts’ Perspective- Given the timing of the survey reference periods in this month’s jobs report, the magnitude of job losses for “March” only reflects the beginning of the pandemic. Economists in a Bloomberg article released today predict a decline in total nonfarm employment “in the vicinity of 20 million” in April, and that “unemployment will soar toward 15% next month.” During this challenging time, the temporary penetration rate will likely decline as temporary agency employment does what it is designed to do in a situation like this (absorb losses overall while responding to certain instances of growing demand). As far as what happens after April, we will be looking for a flattening in confirmed cases of COVID-19, the new key leading economic indicator.
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