Event: 

The August Employment Situation, released today by the US Bureau of Labor Statistics (BLS), indicates that total nonfarm employment rose by +142,000 in August on a seasonally adjusted basis, while temporary help services employment declined by -2,900 jobs. The temporary agency penetration rate was 1.70% in August, unchanged from a revised 1.70% in July. The national unemployment rate was little changed at 4.2% (down three basis points from 4.25% in July to 4.22% in August).

Employment expanded in most industry groups. The group with the largest gain was Leisure and hospitality, which added +46,000 jobs; followed by Health and social assistance, which added +44,100 jobs; and Construction,  which added +34,000 jobs. The greatest declines in employment were in the Manufacturing sector, which fell by -24,000; the Retail trade sector, which fell by -11,100; and the Information sector, which declined by -7,000.

BLS Revisions:

The change in total nonfarm payroll employment for June was revised down by 61,000, from +179,000 to +118,000, and the change for July was revised down by 25,000, from +114,000 to +89,000. With these revisions, employment in June and July combined is 86,000 lower than previously reported.

The change in temporary help services employment in June was revised down, from a decrease of -22,600 to a decrease of -29,700, and the previously estimated July decline of -8,700 was revised down to a loss of -18,100. On net, temporary help services employment in July was 16,500 lower than previously reported.

SIA’s Perspective: 

The US economy added +142,000 jobs in August, falling short of the +165,000 median forecast in  the Bloomberg and +160,000 Reuters surveys of economists.

Overall labor force participation remained steady at 67.7% in August and the prime age (25-54) labor force participation rate declined, falling 10 basis points to 83.9%, remaining near its highest values since the 2001 recession.

As expected, the number of people unemployed due to temporary layoffs declined meaningfully, falling -190,000 and reversing most but not all of the uptick observed in July.

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 continuing trending sideways, increasing 0.1% in August after a decline of -0.5% in July, with Y/Y declines at -0.7% in both July and August. Aggregate overtime hours in manufacturing similarly declined M/M in August, down -0.1% but on a Y/Y basis, advanced +2.4%. Hours in transportation and warehousing increased +0.1% M/M and on a Y/Y basis, increased +0.9%.  

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: