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US Jobs Report: March 2019

Event- On a seasonally adjusted basis, total nonfarm employment rose by 20,000 in February, according to the US Bureau of Labor Statistics (BLS) in its monthly jobs report. Temporary help services added 5,800 jobs. As growth in temporary help was not as weak as growth in overall employment, the temporary staffing penetration rate rose from 2.024% to 2.028% for the month. The national unemployment rate declined from 4.0% to 3.8% in February, partially driven by a dip in the labor force.

Background and Analysis- On a year-over-year (y/y) basis (February 2019 over February 2018), total nonfarm employment was up 1.7%, and monthly job gains have averaged approximately 209,000 over the past 12 months. Temporary help employment was up 2.2% y/y, with monthly job gains averaging approximately 5,600 over the past 12 months.

Of the 15 major industry groups, only seven added jobs for the month. The three that most drove total nonfarm employment growth (on a seasonally adjusted basis) were professional services excluding temporary help (+36,200), healthcare and social assistance (+22,500), and wholesale trade (+10,900). On a y/y percentage basis, natural resources/mining, construction, and transportation and warehousing continue to be the three strongest, up 6.8%, 3.6%, and 3.1%, respectively, despite all three groups losing jobs for the month.

Y/y growth in average hourly earnings provided some welcome news, at 3.5% in February, up from a downwardly revised 3.1% in January.

BLS Revisions- The change in total nonfarm payroll employment for January was revised from 304,000 to 311,000, and the change for December was revised from +222,000 to +227,000. With these revisions, total nonfarm employment gains were 12,000 greater than previously reported.

The change in temporary help services employment for January was revised from +1,000 to -11,500, and the change for December was revised from +7,900 to +13,500. With these revisions, temporary help employment growth was lower than previously reported by 6,900 jobs.

Staffing Industry Analysts’ Perspective- After a surge of over 300,000 jobs in January, total nonfarm employment growth of 20,000 was disappointing. While every now and then, we get a month that is an outlier (after growth of only 18,000 jobs in September 2017, jobs rose by more than 200,000 in each of the next two months), it would not be surprising to see weaker job growth moving forward at this stage in the business cycle, especially with the stimulatory effect of the Tax Cuts and Jobs Act wearing off.

Weaker trends in temporary staffing typically precede those in total nonfarm employment. While the headline growth of 5,800 jobs may not seem disappointing, it is more than offset by the downward revision to January. Given that the temporary staffing numbers are not only choppy on a monthly basis, but also often substantially revised one or two months later, it is best to take at least a three-month average, which gives modest growth of 2,600 per month. A four-month average gives 2,300.

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

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