Temporary-help employment, often seen as an early indicator of shifts in the labor market and economy, dipped for the seventh consecutive month in August.
The number of people employed at US temporary help services fell by 18,900 workers from a month earlier, continuing a downward trend, according to Bureau of Labor Statistics data released Friday.
Historically, the industry has been a harbinger of where the labor market is headed, with employers often adding temp workers before adding full-time staff when demand picks up, and shedding them sooner when business slumps.
US Temporary Help Workers
Temporary-help employment dipped for the seventh consecutive month
Source: Bureau of Labor Statistics
However, it’s been less reliable as an indicator recently.
The US labor market has been resilient lately, with nonfarm payrolls rising by 187,000 last month, more than the consensus forecast of economists surveyed by Bloomberg, though every month this year payrolls have subsequently been revised down after the initial release. Still, while unemployment rose to 3.8%, the level is low historically and partly reflects an increase in participation.
Some of the US’s largest staffing agencies told Bloomberg recently they see even odds the country can avoid a recession, while American Staffing Association Chief Executive Officer Richard Wahlquist said, “From what we’re seeing right now, it looks like a soft landing for the economy.”
With this increase in job-seekers, the participation rate now sits at 62.8%, the highest since February 2020, or just before the COVID-19 pandemic brought the American economy to a standstill. And if you just count so-called “prime-age” workers (those between the ages of 25 and 54), the participation rate is the highest it has been in more than two decades.
Surely the jobs market is showing signs of a cooldown. Since June, the US economy has added 449,000 jobs, the lowest three-month total since 2020. Meanwhile, wage growth slowed, with average hourly earnings increasing by just 0.2% in August. But there actually was an increase in the number of employed Americans overall—only now there are more people looking for work.
Charted: The US labor participation rate returns to pre-pandemic levels
A high participation rate is a good sign for the economy
All of this is good news for the economy. The moderation in wages suggests the Fed’s interest rate hikes are preventing the economy from overheating, while the current pace of job growth—roughly 150,000 new jobs a month—suggests the labor market should be able to absorb an increase in the participation rate without a dramatic increase in unemployment.
In the pandemic, the number of people actively seeking work dropped precipitously, reflective of the extreme circumstances and the related economic downturn. The recovery in the participation rate demonstrates progress in the accessibility of the job market and the strength of the overall economy. The increase is also likely a sign that the labor shortage that plagued American businesses in 2021 and 2022 has eased.
This combination of factors—more people seeking work combined with cooling wage growth—makes it more likely the inflation rate will continue to decline. This could, in turn, encourage the Federal Reserve to hold off on another increase in interest rates at its next policy meeting later this month.
U.S. job growth continued to chug along at a steady pace in August, boosted by a flurry of hiring across different sectors of the economy.
Employers added 187,000 jobs in August, the U.S. Department of Labor said in its monthly payroll report released Friday, topping the 170,000 jobs forecast by Refinitiv economists.
At the same time, a separate report based on a survey of households offered a slightly different picture of the labor market. The report indicated that the unemployment rate climbed to 3.8% from 3.5% as the labor force participation rate rose to a nearly three-year high. It marked the highest jobless rate since February 2022 and the biggest increase since the early days of the COVID-19 pandemic.
Job gains were mostly broad-based last month, with the healthcare industry leading the way. The sector added 70,900 new jobs last month, following a similar gain in July.
"Hiring remains solid across the economy and many firms still point to finding skilled labor as their primary challenge despite a cooling in the overall pace of job creation," said Joe Brusuelas, RSM chief economist.
Hospitals accounted for a large percentage of those gains, adding 14,500 workers in August. There were also notable gains in the offices of physicians (14,100), home health care services (11,200) and outpatient care centers (5,000).
Hiring in leisure and hospitality was the second-biggest contributor to the job gain last month. The sector hired 40,000 employees in August, with the biggest gains stemming from restaurants and bars (14,900). Hotels, meanwhile, onboarded 8,600 new employees.
Employment in the sector remains below its pre-pandemic level by about 290,000 workers or 1.7%.
Another big source of job creation in August was social assistance, which saw payrolls increase by 26,400. Individual and family services accounted for the bulk of those gains, adding 20,500 workers. There was also a modest increase in child care services (3,300) and vocational rehabilitation services (1,400).
A hiring sign is displayed at a grocery store in Arlington Heights, Ill., Friday, January 13, 2023. ((AP Photo/Nam Y. Huh, File) / AP Newsroom)
Hiring increased in other industries, including construction (22,000), professional and business services (19,000), manufacturing (16,000) and government (8,000).
However, there were also sectors of the economy that shed jobs last month. Transportation and warehousing saw employment plunge by 34,200 – largely the result of trucking giant Yellow halting operations and laying off 30,000 employees.
The information sector shed 15,000 jobs, while employment within mining and logging fell by 2,000.
Temporary help employment fell for the seventh consecutive month in August with the number of temp help jobs declining by 18,900 to a total of more than 2.9 million, according to data from the US Bureau of Labor Statistics. Temp jobs were down 5.9% on a year-over-year basis. They have decreased by 242,000 since their peak in March 2022.
August’s decrease in temporary help jobs follows a decrease of 23,900 in July based on revised data. The temp penetration rate — temp jobs as a percent of total jobs — fell to 1.88% in August from 1.89% in July.
Total nonfarm employment, on the other hand, rose by 187,000 jobs to approximately 156.4 million, a bigger increase than the 157,000 added in July.
“We remain in an unusual situation for jobs, with ongoing growth in overall US employment while temporary employment is declining modestly,” said Barry Asin, president of Staffing Industry Analysts. “In part, this situation can be explained by the impact of a labor market that is relatively tight despite recent cooling. Among other factors, this is illustrated by unemployment rates that remain near record lows and rising temp wages that were up 8% year over year in the latest measure released today.”
The US unemployment rate edged up to 3.8% in August from 3.5% in July. In addition, the college-level unemployment rate — which can serve as a proxy for professional employment — rose to 2.2% in August from 2.0% in July.
Looking at August, the Bureau of Labor Statistics reported employment continued to grow in healthcare, leisure and hospitality, social assistance, and construction.
Healthcare added 71,000 jobs in August. Increases were in ambulatory healthcare services, up 40,000; nursing and residential care facilities, up 17,000; and hospitals, up 15,000.
Leisure and hospitality added 40,000 jobs in August, though the category had gained an average of 61,000 jobs per month over the past year.
Average hourly earnings for all employees on nonfarm payrolls rose by eight cents to $33.82. They have increased by 4.3% over the past 12 months.
Activity in US manufacturing contracted in August, but the rate of contraction slowed compared to July, according to the Institute for Supply Management. The report also indicated a continued slowdown in manufacturing hiring.
The Manufacturing PMI, or purchasing managers composite index, rose to 47.6% in August from 46.4% in July. Only readings above 50% indicate expansion.
August marked the 10th consecutive month of contraction in the Manufacturing PMI.
“The US manufacturing sector shrank again, but the uptick in the PMI indicates a slower rate of contraction,” Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee, said in a press release. “The August composite index reading reflects companies managing outputs appropriately as order softness continues, but the month-over-month increase is a sign of improvement.”
The employment index portion of the composite index ticked up to a reading of 48.5% from a reading of 44.4% in the prior month. That still indicates contraction, but as with the overall Manufacturing PMI, the rate of contraction eased.
“Labor management sentiment at Business Survey Committee respondents’ companies continue to indicate a slowdown in hiring, reflected by attrition, freezes and layoffs,” Fiore said. “In August, attrition was the primary source of head-count reductions; this method is slower compared to hiring freezes or layoffs, which suggests that panelists’ companies are not driven by reducing labor costs.”
The ISM noted that two industries indicated unemployment growth — machinery and transportation equipment. The rest of the 18 manufacturing industries covered either saw a decline or no change in employment in August.
The ISM’s Manufacturing PMI report is based on data from purchasing and supply executives across the US.
Some gig economy workers are less trusting of their managers than traditional workers, according to an article by the University of New Hampshire that cites university research. The report’s findings have implications for performance differences between the worker types, the article said.
“Flexibility also means less traditional workplace interaction and relationship investment by employers, which can lead to less trust by workers,” Rachel Campagna, associate professor of management at UNH’s Peter T. Paul College of Business and Economics, said in the article. “But ironically, that’s not necessarily a bad thing because in some cases if something goes wrong, gig workers don’t seem to take it personally, rebounding more quickly and brushing it off.”
Gig workers were defined as freelancers, independent contractors and temporary workers.
AMID THE HOLLYWOOD strike, Disney is looking to hire a senior executive to “lead crisis communications response efforts,” as well as other senior communications experts to “retain” and “motivate” employees, according to company job postings reviewed by The Intercept.
One posting offers up to $337,920 for a vice president of public affairs to lead a “communications team to assist senior executives in preparing for media events” and “interviews.” “This role is a standard public affairs position with our Disney Parks, Experiences and Products business segment that has existed for more than 15 years,” a Disney spokesperson, who asked that he not be named, told The Intercept. “It’s not new and the opening is the result of an internal move.”
The posting follows a disastrous July 13 interview by CNBC with Disney chief executive Bob Iger, in which he called the actors and writers strikes “very disturbing,” their demands “not realistic,” and coming at “the worst time in the world.”
The interview was widely panned as a catastrophe, with the Hollywood Reporter calling it “infamous” in an article titled “Unpacking Bob Iger’s Terrible, Horrible, No Good PR Week.” The same week, one day prior to the interview, Disney announced that his contract was being extended to 2026, raising his target annual compensation to $31 million. The eye-popping sum drew cynical comparisons to the statistic that only 14 percent of actors represented by the SAG-AFTRA guild earn the minimum $26,470 necessary to qualify for health insurance, per the union’s chief economist.
“We’re unrealistic when he’s making $78,000 a day,” SAG-AFTRA President Fran Drescher said of Iger during an interview with Sen. Bernie Sanders. Drescher went on to chide his CNBC interview, remarking: “He stuck his foot in it so bad that you notice they’re not letting any of the other CEOs open their mouths.”
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Small surprise, then, that Disney is looking to hire a communications executive “with the goal of enhancing and protecting reputation” by “manag[ing] reputation research.” The applicant, the job posting goes on to say, will “develop [a] reputation campaign calendar” as part of a comprehensive plan that will include paid advertising as well as earned media.
The messaging isn’t just external. The same job posting stresses the need to “retain/motivate employees” with “strategic executive engagement plans intended to drive the business narrative.”
Another job posting, for a senior specialist in employee communications and engagement, describes what seems like a sophisticated effort to interface with employees: “You’ll interview employees, develop promotional campaigns, and advise on the best communication vehicles to reach employees.” The posting also alludes to the development of an “internal crisis communications response playbook.”
Though the job postings don’t explicitly identify the source of their concerns, the actors and writers strikes has left Disney short-staffed, after the firm had already laid off 7,000 employees by May. Disney has reportedly been frantically hiring replacements, including from foreign countries.
Iger is far from the only executive to plant his foot in his mouth. On July 11, Deadline published an interview with a studio executive who said of the strike: “The endgame is to allow things to drag on until union members start losing their apartments and losing their houses.”
The comment drew swift condemnation from many, including actor Ron Perlman, who posted a heated video response to his Instagram account. “You wish that on people?” Perlman said. “You wish that families starve while you make $27 fucking million a year for creating nothing?”
The actor's and writers' strikes represent the first such joint strike in over half a century, since 1960. The writers, represented by the Writers Guild of America, have been on strike since May 2, with the actors union joining them on July 14.
Demands by the actor's and writers' unions include protections against AI, in which Hollywood studios are investing lavishly. Netflix recently offered up to $900,000 for a single AI product manager job, as The Intercept reported.
By contrast, in one case, actors were offered just $300 for scans of their likenesses to train AI databases.
Here are the key takeaways from the US employment report for August released Friday:
- Payrolls came in higher than forecast at 187,000, while the unemployment rate climbed to 3.8% as more people entered the labor market looking for jobs. The participation rate and hours worked also increased. Wage growth continued to weaken gradually, rising 4.3% on the year and 0.2% on the month, both slower than July’s reading.
- Downward revisions to the prior two months knocked off 110,000 from payrolls for that period. In June alone, the figure was revised down by about 40%. It signals that the labor market is cooling more than economists and the Federal Reserve initially thought.
- This was a more complicated report than in recent months with lots of cross-currents. Overall, it supports the soft-landing thesis for the economy, as the labor market is easing without major layoffs and wage dips. While there was less demand in many sectors (including a continued drop in the level of temporary workers), more people joined the labor market in August — including the highest number of new entrants since 2019. The participation rate for prime-age workers also rebounded.
- This seems like an ideal report for the Federal Reserve. Wage gains are coming down and payrolls are rising but at a much slower pace. Central bankers have highlighted the strength of the labor market as a key challenge in getting price growth to cool. We’ve still got consumer price data later this month, but this kind of jobs report is more evidence for analysts calling for a hold in interest rather than a hike.
- The S&P 500 index climbed 0.7% at 9:31 a.m. in New York. Two-year Treasury yield dropped. Interest-rate futures showed greater confidence in the Fed avoiding another hike this year, and bets on more rate cuts in 2024. The dollar dipped.