Last week’s downgrade does not materially change the narrative of a slow but steady cooldown in the labor market but rather, provides further evidence of additional softening.
Noah Yosif
Weekly Economic Outlook
08/27/2024
The Good, Bad, and Ugly: BLS Annual Revisions to Nonfarm Payrolls
Last week, the U.S. Bureau of Labor Statistics published annual revisions to nonfarm payrolls that suggested it overestimated job growth by 818,000 new positions. This roughly translates to 68,000 fewer payroll additions per month, and amounts to the largest downward revision since 2009, which suggests that the labor market was not as resilient to tightening economic conditions as initially perceived. These revisions are a standard practice which enables BLS to generate more accurate estimates of nonfarm payroll growth by reconciling data from its monthly survey of business payrolls to its quarterly estimates of employment and wages that are reported on a lag.
Last week’s downgrade does not materially change the narrative of a slow but steady cooldown in the labor market but rather, provides further evidence of additional softening. An average annual nonfarm payroll growth of 173,500 versus 242,000 suggests that the labor market remains healthy, and officials at the Federal Reserve have asserted that concerns over the revisions have been “overstated.”
However, these revisions do have important implications for staffing companies. Nonfarm payrolls for Information as well as Professional Business Services realized some of the largest declines following these annual revisions, which suggests a faster erosion in hiring in the Professional–Managerial space. By contrast, upward revisions to Education and Health Services as well as Transportation and Warehousing suggest that staffing demand could be on a fast track to normalization in both the Health Care and Industrial spaces.Â
Although the labor market continues to cool at a healthy clip, understanding sector-specific differences in hiring trends will enable staffing companies to better understand short-term opportunities ahead as interest rates ease and economic conditions improve.
Annual Nonfarm Payroll Revision by Sector
Source: U.S. Bureau of Labor Statistics
Weekly Staffing Research Outlook
08/27/2024
With nearly two-thirds of employers (63%) indicating a lack of qualified candidates is likely to impact their hiring efforts in the year ahead, there is plenty of need in the market for the services staffing provides.
Tim Hulley
Hiring Hiccups—Can Staffing Firms Help?
The staffing industry is a crucial player in the labor market, as it matches candidates to opportunities efficiently. Recent research from iHire outlines the outlook and challenges faced both by employers and job seekers, which in turn suggests opportunities for staffing firms.
According to the 2024 State of Online Recruiting Report from iHire, three-quarters of employers were currently hiring as of June 2024. Despite a labor market that has weakened in recent months, employers report facing several challenges in online recruiting, including too many unqualified applicants (63%), cost of using a job board/recruiting platform (44%), ghosting/unresponsive candidates (51%), receiving too few applicants (39%), and candidates dropping out of the hiring process altogether (28%). For their part, candidates report not hearing back about applications or getting ghosted as their top challenge by far when job searching on an online job board (55%).Â
Staffing professionals are in a good position to address these challenges for employers and candidates alike. Communicating to clients about expertise in sourcing, screening, and keeping candidates engaged may help overcome cost objections by illustrating how staffing firms can ease specific pain points compared to hiring through a job board or recruiting platform. On the candidate side, engaging in regular communication and providing feedback can be a differentiator, keeping a candidate in the pipeline even if one opportunity doesn’t work out.
With nearly two-thirds of employers (63%) indicating a lack of qualified candidates is likely to impact their hiring efforts in the year ahead, there is plenty of need in the market for the services staffing provides.
Greatest Challenges When Recruiting Through Job Boards or Recruiting Platforms
Source: iHire 2024 State of Online Recruiting Report
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