Event: The October Employment Situation, released today by the US Bureau of Labor Statistics (BLS), indicates that total nonfarm employment rose by +150,000 in October on a seasonally adjusted basis, while temporary help services employment increased by +6,600 jobs. The temporary agency penetration rate was 1.88% in October, steady with its September rate of 1.88%. The national unemployment rate increased to 3.9% in October, from 3.8% September.

Employment expanded in most industry groups. The group with the largest gain was Health and social assistance, which added +77,200 jobs; followed by Government, which added +51,000; and Construction, which added +23,000. Employment declined in the Manufacturing, Transportation and warehousing, Information, Financial activities, and Other services sectors. The greatest decline occurred in the Manufacturing sector, which fell by -35,000; followed by Transportation and warehousing, which fell by -12,100; and Information, which fell by -9,000.

BLS Revisions:

The change in total nonfarm payroll employment for August was revised down by 62,000, from +227,000 to +165,000, and the change for September was revised down by 39,000, from +336,000 to +297,000. With these revisions, employment in August and September combined is 101,000 lower than previously reported.

The change in temporary help services employment in August was revised up from a loss of -13,300 to a loss of -10,100, and the previously estimated decline of -4,200 in September was revised down to a decline of -8,900. With these revisions, temporary help services employment in September was -1,500 lower than previously reported.

SIA’s Perspective: 

The US economy added +150,000 jobs in October, fewer than the 180,000 median forecast in a Bloomberg survey of economists.  The weakness in the October employment figures can be safely attributed to the impacts of the UAW strike, and now that the strike is over will reverse, providing a significant tail wind to month-over-month employment growth when the November employment figures are reported in the December Employment Situation.

The unemployment rate increased by 10 basis points, from 3.8% to 3.9%, while labor force participation declined. The overall labor force participation rate declined by -10 basis points to 62.7%, and the prime age (25-54) labor force participation rate fell by -20 basis points to 83.3%.

These declines may simply reflect impacts of the UAW strike, and even with these declines, the prime age participation rate remains near recent highs, and matches its highest level since 2008.

For the first time since January 2023, employment in the temporary help services industry expanded, though modestly, with +6,600 new jobs month-over-month. This is a welcome change from the year-to-date streak of month-over-month contraction. However, revisions to prior months’ figures were again negative, and even with today’s reported expansion, the industry is decelerating from pandemic highs. We are cautiously hopeful that gains continue through the coming months and this proves to be a turning point for the industry.

Competitive pressures continue to increase but there are 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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