Event: 

The July Employment Situation, released today by the US Bureau of Labor Statistics (BLS), indicates that total nonfarm employment rose by +114,000 in July on a seasonally adjusted basis, while temporary help services employment declined by -8,700 jobs. The temporary agency penetration rate was 1.71% in July, down from a revised 1.72% in June. The national unemployment rate increased to 4.3%, from 4.1%.

Employment expanded in most industry groups. The group with the largest gain was once again Health and social assistance, which added +64,000 jobs; followed by Construction,  which added +25,000 jobs; and Leisure and hospitality, which added +23,000 jobs.

The greatest declines in employment were in the Information sector, which fell by -20,000; the Temporary help services industry, which fell by -8,700; the private Education sector, which declined by -7,200; and Other services, which fell by -4,000.

BLS Revisions:

The change in total nonfarm payroll employment for May was revised down by 2,000, from +218,000 to +216,000, and the change for June was revised down by 27,000, from +206,000 to +179,000. With these revisions, employment in May and June combined is 29,000 lower than previously reported.

The change in temporary help services employment in May was revised up, from a decrease of -15,900 to a gain of +14,000, and the previously estimated June decline of -48,900 was revised up to a loss of -22,600. On net, temporary help services employment in June was 56,200 higher than previously reported.

SIA’s Perspective: 

The US economy added +114,000 jobs in July, falling short of the +175,000 median forecast in both the Bloomberg and Reuters surveys of economists.

Overall labor force participation continued to rebound in July, increasing 10 basis points, from 62.6% to 62.7% and the prime age (25-54) labor force participation rate rapidly advanced, up by 30 basis points from 83.7% to 84.0% - a prime age participation rate not seen since prior to the 2001 recession, and never seen prior to the late-1990s.

The increase in the unemployment rate was primarily driven by an increase in the number of people on layoff, but increased labor force participation contributed as people who had left the labor force reentered and looked for but did not find jobs. Folks in the “on layoff” category are usually expected to return to work at the same job, rather than considered to have permanently lost their jobs, so this may reverse next month. Hurricane Beryl likely caused much of this uptick, suggesting it is indeed a temporary hit to the labor market.

With the caveat that the BLS data for temporary help services largely reflect the industrial segment due its large share of headcount, data on major client verticals again indicate ongoing weakness in demand for temporary help services. Aggregate hours worked in manufacturing declined by -0.6% in July M/M and similarly fell -0.7% Y/Y, with aggregate overtime hours almost unchanged, declining by -0.1% M/M but down -3.2% Y/Y. Hours in transportation and warehousing advanced by +0.6% and likewise advanced on Y/Y basis, up 1.6%.

As anticipated, the June BLS temporary help services figures released last month were substantially revised today, and are now in-line with industry data such as our SIA | Bullhorn Staffing Index. The extreme, single-month decline of -48,900 originally published for June was increased by +26,300 to -22,600 – more than halving the one-month decline. Revisions to May were even stronger, increasing by 29,900, reversing an estimated decline of -15,900 to a monthly gain of +14,000. These substantial changes suggest the BLS may be having difficulty getting surveyed firms to respond in a timely manner.

We recently published a report describing our thoughts on the ongoing divergence of the staffing industry and the overall US economy, “Insights on the Recent Downturn in US Temporary Staffing 2024.” We strongly encourage readers to review this report for discussion of overarching factors underlying this weakness in staffing, as well as reasons for optimism.

With most economists projecting solid growth in the US economy this year (real GDP growth of 2% or higher), we are keeping our eyes open for signs of an eventual uptick in demand for temporary staffing.

Competitive pressures remain high but opportunities remain for those staffing firms that have developed a competitive advantage via either their technology, their service offerings, or both.

Members may download this month’s jobs report or access our new interactive tool (beta) below: