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US Jobs Report: February 2019

Event- On a seasonally adjusted basis, total nonfarm employment rose by 304,000 in January, according to the US Bureau of Labor Statistics (BLS) in its monthly jobs report. Temporary help services employment was about the same as the prior month, adding 1,000 jobs, and the temporary staffing penetration rate was 2.03%. The national unemployment rate rose from 3.9% in December to 4.0% in January.

Background and Analysis- On a year-over-year (y/y) basis (January 2019 over January 2018), total nonfarm employment was up 1.9%, and monthly job gains have averaged approximately 234,000 over the past 12 months. Temporary help employment was up 2.7% y/y, with monthly job gains averaging approximately 6,600 over the past 12 months.

Of the 15 major industry groups, the three that most drove total nonfarm employment growth in January (on a seasonally adjusted basis) were leisure and hospitality (+74,000), construction (+52,000), and healthcare and social assistance (+45,400). Information was the only decliner for the month, down by 4,000 jobs. On a y/y percentage basis, natural resources/mining, construction, and transportation and warehousing continue to be the three strongest, up 8.7%, 4.7%, and 4.1%, respectively.

Y/y growth in average hourly earnings was 3.2% in January, down slightly from an upwardly revised 3.3% in December.

BLS Revisions- The change in total nonfarm payroll employment for December was revised from +312,000 to +222,000, and the change for November was revised from +176,000 to +196,000. With these revisions, total nonfarm employment gains were 70,000 lower than previously reported.

The change in temporary help services employment for December was revised from +10,300 to +7,900, and the change for November was revised from +10,500 to +1,300. With these revisions, temporary help employment growth was lower than previously reported by 11,600 jobs.

In addition to the revisions to the last two months from the previous month’s report, which BLS typically does with each monthly report, this month BLS also performed its annual revision to their benchmarking and seasonal adjustment factors, which revises data over the past several years. In last month’s report, the temporary agency penetration rate was at a record 2.06%. As a result of revisions, the “record” penetration rate is now 2.05%, from December 2015. The penetration rate now stands at 2.03%, below that level. This is not the first time the penetration rate has inched its way to a record, only to give up considerable gains in the annual revision. A year ago, the penetration rate was also at a record 2.10%, and then after the annual revision, the record was once again the 2.05% level from December 2015. As long ago as December 2014, the penetration rate was at a record and above 2.10%. After the annual revision, that month’s rate was 2.04%.

Staffing Industry Analysts’ Perspective- The small rise in the unemployment rate may have been driven by the partial government shutdown (the rise in the participation rate has been cited as a factor, but the actual number of people in the labor force declined slightly in January). In the household survey, on which the unemployment rate is based, workers on temporary layoff are classified as unemployed.

The government shutdown does not appear to have had a major effect on the headline number for total nonfarm employment, as January experienced a robust increase of 304,000 jobs. BLS noted that in the establishment survey (on which that number is based), federal employees on furlough during the partial shutdown were considered employed because they worked or received pay or will receive pay for the reference pay period. In fact, employment in the government industry group rose by 8,000 in January, after rising by 16,000 in December.

BLS does go on to note, however, that federal contractors who did not work or receive pay during the partial federal government shutdown were not counted among the employed in the establishment survey, which raises the question of whether the shutdown was a factor behind the soft temporary help number.

After the downward revision to November, and this month’s soft growth of 1,000, the recent trend in temporary help employment suddenly looks much less stellar than it did last month. The next two months should be telling as to whether this change is part of the typical month-to-month volatility, or indicative of a real trend of temporary employment softening as an early indicator of an economic slowdown.

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

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