Payroll Growth Hums Along

Economic Pulse
August 7, 2015
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July’s payroll figures were broadly in-line with consensus, with total nonfarm payrolls rising by 215,000 and upward revisions to the figures from May and June adding a net +14,000. Employment in financial activities increased by 17,000 in July, led by gains at insurance carriers, where jobs rose by 10,000. Gains in information jobs were modest (+2,000) as the publishing sector continued to contract. Within the professional and business services category, job gains totaled 40,000—a more tepid reading than in prior months. While employment gains in computer systems design and related services (+9,000) and architectural and engineering services (+6,000) have been strong (accounting for nearly half of the 301,000 increase in professional and technical services employment over the past 12 months), July’s contraction in temporary help services jobs accounted for most of the shortfall in office-using job gains versus prior months (Table 1 and Chart 1).

Table 1
Monthly Change in Office-Using Payrolls by Category (000s, SA)

Monthly Change in Office-Using Payrolls by Category

As shown in Chart 2, employment in temporary help services has typically led the overall trend in private sector employment by approximately six to nine months. While it’s hard to read into any one month’s figure (and July’s contraction in temporary help employment may just represent a temporary reversal from a strong June figure), the trajectory of temporary help service jobs will be important to monitor in the months ahead. Employers have actively embraced temporary workers amid an uncertain recovery, and with the average workweek (34.6 hours) at the top of its historic range, employers are unlikely to be able to extract further output from existing workers (barring a shift in current productivity). A reduction in the number of temporary workers on employers’ payrolls going forward could signal an overall softening in labor market trends into the second half of this year and early 2016 —an outcome that might not be terribly surprising as we enter into the seventh year of recovery.

Chart 1
Office-Using Employment and Total Payrolls,
(July 2007 – July 2015 Seasonally-Adjusted, 000s)

ffice-Using Employment and Total Payrolls

Chart 2
Temporary Help Services Employment and Private Employment Advanced by Six Months,
January 1997 – July 2015 (Seasonally-Adjusted, 000s)

Temporary Help Services Employment and Private Employment Advanced by Six Months