US Jobs Report: July 2019

Event- On a seasonally adjusted basis, total nonfarm employment rose by 224,000 in June, according to the US Bureau of Labor Statistics (BLS) in its monthly jobs report. Temporary help services gained 4,300 jobs for the month, though the gain in June was more than offset by downward revisions to April and May. The temporary staffing penetration rate was virtually unchanged from the prior (revised) month, at 2.01%. The national unemployment rate ticked back up slightly for the month, from 3.6% to 3.7%, entirely driven by additions to the labor force.

Background and Analysis- On a year-over-year (y/y) basis (June 2019 over June 2018), total nonfarm employment was up 1.5%, and monthly job gains have averaged approximately 192,000 over the past 12 months. Temporary help employment was up 1.3% y/y, with mild monthly job gains of approximately 3,300 over the past 12 months.

Of the 15 major industry groups, 13 added jobs in June. The three that most drove total nonfarm employment growth (on a seasonally adjusted basis) were health and social assistance (+50,500, a larger gain than the +26,300 in May), professional services excluding temporary help (+46,700, a larger gain than the +24,300 in May), and government (+33,000, after declining by 11,000 in May). Natural resources/mining, construction, and transportation/warehousing continue to lead all industries in y/y percentage growth (3.1%, 3.1% and 2.9%, respectively), despite recent cooling (y/y growth rates have come down from the respective levels of 8.6%, 4.6% and 4.3% in January). Information and retail trade continue to be the two decliners on a y/y basis (-0.8% and -0.3%, respectively).

Wage growth has been cooling slightly after gaining traction last year. Y/y growth in average weekly earnings was 2.8% in June, a deceleration from the average of 3.2% over the last twelve months, driven by softer growth in average hourly earnings and a small decline in the average hours worked per week.

BLS Revisions- The change in total nonfarm payroll employment for May was revised from +75,000 to +72,000, and the change for April was revised from +224,000 to +216,000. With these revisions, total nonfarm employment gains were 11,000 lower than previously reported.

The change in temporary help services employment for May was revised from +5,100 to -300 and the change for April was revised from +9,900 to +4,300. With these revisions, temporary help employment growth was lower than previously reported by 11,000 jobs, more than offsetting the gain of 4,300 jobs in June. This is the second month in a row with downward revisions of at least 11,000 jobs.

Staffing Industry Analysts’ Perspective- The headline numbers in recent jobs reports have suggested steady growth in temporary staffing (a gain of 4,300 jobs in June, and last month’s report showed a gain of 5,100 in May). However, when you factor in the revisions that BLS makes to the two prior months in each report, this month’s jobs report reflects a decline of 6,700 jobs and last month’s report reflects a decline of 7,600 jobs. This is part of a trend this year that has seen the temporary staffing market lose 22,000 jobs since December, with the penetration rate declining from 2.04% in December to 2.01% in June. These flattish (or slightly downward) trends in temporary staffing volume are consistent with the latter stages of an economic expansion (a record ten years and counting).

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Monthly Employment Situation July 2019 - You do not have permission to view this object.


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