Skip page header and navigation

October 2024 Jobs Report

October 2024 Jobs Report

Michael Schultz, Timothy Landhuis
| October 4, 2024
Image

public

Event: 

The September Employment Situation, released today by the US Bureau of Labor Statistics (BLS), indicates that total nonfarm employment rose by +254,000 in September on a seasonally adjusted basis, while temporary help services employment declined by -13,800 jobs. The temporary agency penetration rate was 1.68% in September, down from a revised 1.69% in August. The national unemployment rate decreased to 4.1% from an August rate of 4.2%.

Employment expanded in most industry groups. The group with the largest gain was Leisure and hospitality, which added +78,000 jobs; followed by Health and social assistance, which added +71,700 jobs; and Government,  which added +31,000 jobs. The greatest declines in employment were in the Temporary help services industry, which fell by -13,800; the Transportation and warehousing sector, which fell by -8,600; and the Manufacturing sector, which declined by -7,000.

BLS Revisions:

The change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.

The change in temporary help services employment in July was revised down, from a decrease of -18,100 to a decrease of -19,100, and the previously estimated August decrease of -2,900 was revised down to a loss of -6,500. On net, temporary help services employment in August was -4,600 lower than previously reported.

SIA’s Perspective: 

Before going into our discussion of today’s Jobs Report and recent economic data, everyone at SIA would like to extend our thoughts to everyone impacted by Hurricane Helene. Estimates so far suggest Helene was one of the most devastating storms in US history. For the people and communities impacted, recovery will span years. For anyone so inclined, we encourage assisting relief efforts.

Turning to the economic data: The impacts of Helene will show up in future data, but the impact on national data will be muted. In the month following Hurricane Katrina, employment in Louisiana declined by 128,900 and national employment growth fell from 198,000 in August 2005 to 57,000 in September 2005. Louisiana did not re-attain its pre-Katrina employment level until June 2013 - despite being relatively unimpacted by the Great Recession.

The US economy added +254,000 jobs in September, significantly higher than the +146,000 median forecast in the Bloomberg and +140,000 Reuters surveys of economists.

Overall labor force participation remained steady at 62.7% in September and the prime age (25-54) labor force participation rate declined 10 basis points to 83.8% but remains near its highest values since the 2001 recession.

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. As might be expected from employment declines in Manufacturing and Transportation and warehousing, aggregate hours worked in manufacturing declined slightly, whether looking at a M/M (-0.1%) or Y/Y (-0.5%) basis, and overtime hours likewise fell M/M (-2.8%, fairly sharp compared to recent declines) and Y/Y (-0.6%), while Transportation and warehousing hours also declined M/M (-0.4%) and Y/Y (-0.1%).

Job Openings and Labor Turnover Data

In Tuesday’s Job Openings and Labor Turnover release, aggregate hiring activity continued the downward trend that began late in 2021. This decline is broad-based, spanning across economic sectors reflecting labor market deceleration. August saw one notable exception, with the hiring rate ticking up from 4.1% to 4.8% in the professional and business services sector. Other sectors aligned with staffing client verticals posted declines, with a sharp, 50 basis point fall in the hiring rate for the trade, transportation, and utilities aggregate fell 50 basis points to 3.4%. The hiring rate in the manufacturing sector declined 30 basis points to 2.4%, similarly fell 20 basis points to 3.1% in the healthcare and social assistance sector. These suggest continued slowing of labor demand.

Trends in job openings for these sectors mirror hiring activity but are generally less negative. The vacancy rate in trade, transportation, and utilities has largely held steady since the start of the year. The vacancy rate in professional and business services rose in both July and August, suggesting the recent uptick in hiring for this sector may not be just statistical noise. The combined signal from this hiring uptick and job vacancy trends suggests staffing firms may see improving demand within the non-healthcare professional segments over the coming months.

Updated Federal Reserve Economic Projections

With each Federal Open Market Committee meeting, the Federal Reserve publishes a Summary Economic Projections, reflecting forecasts from the members of Board of Governors and the Presidents of each Federal Reserve Bank. With the SEP release alongside the September FOMC meeting and 50 basis point interest rate cut, the median forecast in the SEP was lowered versus the June SEP, with 2024 GDP growth reduced from 2.1% to 2.0% and the projected unemployment rate increased from 4.0% to 4.4%. For 2025, estimated GDP growth was unchanged at 2.0%, while the forecast unemployment rate was increased 20 basis points from 4.2% to 4.4%. Forecast interest rates were similarly cut, with 2025 expected to see interest rates at 3.4%, down 70 basis points from the June projection of 4.1%. This suggests an additional interest rate cuts totaling another 150 basis points, alongside an additional 20 basis point uptick in unemployment. However, it’s worth noting that FOMC participants indicated that if unemployment deviates from the forecast, it is more likely to exceed the forecast rather than come in lower than anticipated. While FOMC participants continue to expect a soft landing, they remain concerned with the possibility of recession. While the base case is that unemployment will increase only slightly more before stabilizing, the level of uncertainty in factors shaping 2025 remains high, and staffing executives should plan for a wide range of possible scenarios, ranging from a strong return to growth all the way to a potential recession.

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.

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:

This information can only be accessed by SIA members.

If you are already a member, please log in.
If you have logged in and still don’t have access, please email us at [email protected].  
If you need information about becoming a SIA member, please visit our Membership Overview page.

Michael Schultz, Timothy Landhuis
| October 4, 2024