Event: The June Employment Situation, released today by the US Bureau of Labor Statistics (BLS), indicates that total nonfarm employment rose by +209,000 in June on a seasonally adjusted basis, while temporary help services employment fell by -12,600 jobs. The temporary agency penetration rate was 1.93% in June, down slightly from a revised 1.94% in May. The national unemployment rate fell to 3.6% from 3.7% in June, and the labor force participation rate remained at 62.6%.

Employment expanded in most industry groups. The group with the largest gain was again Health and social assistance, which added +65,200 jobs; followed by Government, which added +60,000 jobs; and Professional services (excluding temporary help), which added +33,600 jobs. Employment declined in four sectors and the temporary help services industry. The greatest decline was in temporary help services, which fell by -12,600; followed by Retail trade, which fell by -11,200; and Transportation and warehousing, which fell by -6,900.

BLS Revisions:

The change in total nonfarm payroll employment for April was revised down by 77,000, from +294,000 to +217,000, and the change for May was revised down by 33,000, from +339,000 to +306,000. With these revisions, employment in April and May combined is 110,000 lower than previously reported.

The change in temporary help services employment in April was revised down from a -6,900 decline to a loss of -20,500, and the previously estimated increase of +7,700 in May was revised down to a gain of +3,000. With these revisions, temporary help services employment in May was -18,300 lower than previously reported.

SIA’s Perspective: 

The US economy added +209,000 jobs in June, below the median forecast in a Bloomberg survey of economists, which called for a gain of +230,000. This marks the first time in fifteen months that nonfarm payroll growth came in below expectations. For context, prior to the pandemic recession, the trend rate of monthly nonfarm payroll growth was around +200,000. While today’s employment report was weaker than expected and the weakest we have seen in recent years, +209,000 is a solid posting by historical standards. Further, if cooling a red-hot labor market is necessary to bring down inflation, a return towards pre-COVID “normal” growth could be a welcome development.

The unemployment rate remains historically low and declined even as the labor force grew by +133,000 from May to June. Following a large one-month divergence between employment growth as reported by the Household Survey and the Establishment Survey in May, in June these surveys reported similarly sized gains in employment.

The overall labor force participation rate remains at 62.6%, while in the prime age labor force participation rate (those in the prime of their working years, ages 25 through 54, being largely done with their education and too young to retire) grew to 83.5%. Both prime age labor force participation and prime age employment rates are at their highest levels since the 2001 recession and are not far off from (100 basis points below) their all-time highs from the late 1990s. Labor scarcity remains a challenge.

Temporary help employment fell during June but remains elevated against its entire pre-pandemic history. With a monthly average employment level exceeding three million in the first six months of 2023, temporary help employment is down -3.1% from its average level in the first six months of 2022, but remains +1.1% above its pre-pandemic all-time-highest single month, October 2018. The industry is maintaining a high plateau. Such a plateau in the staffing industry implies continuing and large opportunities for those staffing firms that have developed a competitive advantage via either their technology, their service offerings, or both.

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