Event: 

The December Employment Situation, released today by the US Bureau of Labor Statistics (BLS), indicates that total nonfarm employment rose by +256,000 in December on a seasonally adjusted basis, while temporary help services employment increased by +5,300 jobs. The temporary agency penetration rate was 1.67% in December, unchanged from a revised 1.67% in November. The national unemployment rate was down slightly, at 4.09% compared to a revised November rate of 4.23%.

Employment grew in all but three sectors. The group with the largest gain was Health and social assistance, which added +69,500 jobs; followed by Retail Trade, which added +43,400 jobs; and Leisure and hospitality, which added +43,000 jobs. The declines in employment were in the Manufacturing  sector, which fell by -13,000; the Wholesale Trade sector, which fell by -3,500; and the N. Resources/mining sector, which declined by -3,000.

BLS Revisions:

The change in total nonfarm payroll employment for October was revised up by 7,000, from +36,000 to +43,000, and the change for November was revised down by 15,000, from +227,000 to +212,000. With these revisions, employment in October and November combined is 8,000 lower than previously reported.

The change in temporary help services employment in October was revised up, from a decrease of -33,300 to a smaller decrease of -29,300, and the previously estimated November increase of +1,600 was revised up to a gain of +6,200. On net, temporary help services employment in November was 8,600 higher than previously reported.

SIA’s Perspective: 

The US economy added +256,000 jobs in December, far above the +165,000 median forecast in both the Bloomberg survey of economists and the +160,000 anticipated in the Reuters surveys of economists. Temporary help employment increased in December, up +5,300, and the November increase was also revised higher, from an initial estimate of +1,600 to a revised estimate of +6,200. This is the first time BLS temporary help employment has seen two consecutive months of growth since 2022, and so is quite welcome news.

The latest Job Openings and Labor Turnover release showed job openings increased by +259,000 month-over-month on a seasonally-adjusted basis in November, following an upwardly revised gain of +467,000 in October. This suggests labor demand may be picking up, particularly as quits have declined, lessening pressure for replacement hiring. However, realized hiring continues to fall, so the increase in openings may primarily reflect an increase in recruiting difficulty. Reflecting both revisions to October data and the newly released November figures, the rough plateau in manufacturing sector hiring has given way to declines. Hiring continues growing in the Transportation, warehousing, and utilities industry group but the combined trend of this and manufacturing remains decline: these data no longer suggest stabilization for the client verticals most relevant to BLS Temporary help services.

As seen last month, the increase in job openings is again concentrated in the Professional and business services sector, with openings in this sector up +273,000 month over month (November vs October). The Private education and health care sector also posted large increases in job openings, +81,000 in November.

State level job openings data do not provide detail on the economic sector of openings, and the most up-to-date data are preliminary figures for October. Available figures suggest that job openings have particularly increased in a few states, notably Colorado (+134,000), Georgia (+81,000), Texas (+77,000), and Florida (+58,000).

Looking at trends in industry groups aligned with major staffing client verticals at the state level, we see that over 2024 (comparing seasonally adjusted data for November 2024 and December 2023), manufacturing employment declined by -73,000 nationally. Aggregates always mask disparate experiences, however, and twelve states saw manufacturing employment grow by at least 1,000 jobs over this period. By far the most extensive growth was in Texas, where manufacturing employment increased by 22,800, followed by Idaho (+5,700), Tennessee (+4,800), and Missouri (+3,600). The greatest declines in manufacturing occurred in California, where manufacturing jobs fell by -45,200, and Indiana, which lost -9,600.

In the transportation, warehousing, and utilities industry group employment grew by +114,700 over the year at the national level, and 21 states saw gains of at least 1,000 jobs. Growth was more even across states, though highest in California, which added +16,000 jobs, Florida (+11,600), Texas (+10,500), and Pennsylvania (+10,000). Among states where TTU employment declined, the greatest declines were in North Carolina, which fell by -4,100, and Oklahoma, which fell by -3,100.

Employment in private health care and social services increased in every state, with national growth of +818,900. The states with the greatest expansions were California (+118,100), New York (+103,000), Pennsylvania (+53,600), and Texas (+45,800).

In the Professional and technical services industry group, national employment increased by +116,300, and employment grew in 38 states. The states with the greatest increases were Texas (+30,500), North Carolina (+14,200), Tennessee (+11,600), and South Carolina (+9,900). The greatest declines were in Florida (-3,600) and Illinois (-3,400).

The overall labor force participation rate remained unchanged in December, while the prime age (25-54) rate declined slightly, from 83.5% to 83.4% - near historical highs. Aggregate hours of all employees in the manufacturing sector declined  - but for production workers, hours increased, up +0.2% month-over-month and +0.4% year-over-year (December 2024 versus December 2023), helping explain the apparent disconnect of growth in temporary help employment alongside declining manufacturing employment. Transportation and warehousing hours increased sharply in December, expanding +1.5% month-over-month and +0.9% year-over-year – likely contributing to the improving conditions in temporary help.

In June, we 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. Also, in November we published, “United States Economic and Labor Market Trends 2024,” which compliments our monthly Jobs Report articles by providing medium- and long-term perspectives, including discussion of potential impacts from slowing labor supply growth and population aging. In 2025, we will also publish quarterly reports that provide more detailed discussions of short- and medium-term developments in the US economy and their implications for the staffing industry.

With most economists projecting continued, solid growth (real GDP growth of 2% or higher) in the US economy in 2025, we continue watching for signs of a durable 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: