Event:
The March Employment Situation, released today by the US Bureau of Labor Statistics (BLS), indicates that total nonfarm employment rose by +303,000 in March on a seasonally adjusted basis, while temporary help services employment declined by -1,300 jobs. The temporary agency penetration rate was 1.74% in, down from a revised February rate of 1.75%. The national unemployment rate declined to 3.8%, from 3.9%.
Employment expanded in most industry groups. The group with the largest gain was again Health and social assistance, which added +81,300 jobs; followed by Government, which added +71,000 jobs; and Leisure and hospitality, which added 49,000 jobs. Employment was unchanged in both the Manufacturing and Information sectors. The only monthly decline was in the Temporary help services industry, which fell by -1,300.
BLS Revisions:
The change in total nonfarm payroll employment for January was revised up by 27,000, from +229,000 to +256,000, and the change for February was revised down by 5,000, from +275,000 to +270,000. With these revisions, employment in January and February combined is 22,000 higher than previously reported.
The change in temporary help services employment in January was revised up, from a decrease of -1,200 to a gain of 7,500, and the previously estimated February decline of -15,400 was revised up to a loss of -11,900. On net, temporary help services employment in February was +12,200 higher than previously reported.
SIA’s Perspective:
The US economy added +303,000 jobs in February, exceeding the 214,000 median forecast in a Bloomberg survey of economists and the +200,000 median forecast in the Reuters’ survey. Overall labor force participation increased to 62.7% even as the prime age (25-54) labor force participation rate declined to 83.4% because more teenagers and young adults (16-24) joined the labor force.
Aggregate hours in manufacturing were flat and aggregate overtime declined slightly, while hours in transportation and warehousing increased 1% and are back to their December level. Overall, but with the caveat that the BLS data for temporary help services largely reflect the industrial segment due its large share of headcount, this again suggests ongoing weakness in current demand for temporary help services – particularly as manufacturing overtime hours remain near their all-time, non-recessionary low. We expect that a manufacturing rebound will provide a strong tailwind for BLS measurements of temporary help services and anticipate this sector firming up following interest rate cuts. Rate cuts should also assist the tech sector, providing support for IT staffing.
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 continue to increase 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:
US Employment Situation (online interactive tool)