U.S. labour data points are uniformly strong in June, says Baird
This data is positive for staffing, recruiting, payroll
processing, and online talent solutions firms. Temp staffing continues
to outpace overall employment growth as employers prize flexibility --
with temp penetration hitting yet another all-time high of 2.07%, this
marks the eighth consecutive month of new highs in temp penetration.
* The June BLS Establishment survey indicated 288,000 jobs were
added in the month (confirming yesterday's positive ADP report),
and the Q2 monthly average is roughly 270,000 with prior month
revisions -- the best three-month average in over a year. Gains
have been broad based with the diffusion index at 64.8.
* Our less-volatile Baird Composite confirms this strength
(which also includes the household survey and ADP data and is
smoothed over three months) reflected a similar accelerating
trend of 236,000 jobs added in the month, the highest reading
in five months.
* Unemployment Rate ticked down 20 bps to 6.1% marking the lowest
points since September of 2008. Per the household survey, the
number of jobs added for the month increased by 407,000! This was
a rare month where all major surveys showed accelerating growth.
The unemployment rate for people with a college degree was 3.4%,
relatively tight, and a positive for recruiting related firms
(perm, exec search, job boards, professional online networks).
* Temp help services growth continues to materially outpace overall
employment growth with temp penetration levels hitting new
all-time highs for the eighth consecutive month. Temp help
services added 10,100 jobs in June, reflecting 8.1% yoy growth.
The quarter is on pace for solid 8.5% average growth. We also note
that ASA data implies some acceleration. The penetration rate hit
2.07% a new all-time high, reflecting positive secular trends --
and an obvious positive for staffing stocks.
* Forward-looking data points are also positive -- we note the ISM
reports (manufacturing and non-manufacturing) both indicated solid
growth with upticks in the forward-looking new orders indices.
* Good news we believe is in fact "Good news." Some may worry that
the strength of the labor report might suggest a quicker end to QE
than previously expected. As a counter-point we note that the
labor force participation rate remained flat at 62.8%, near a
35-year low and wage gains (an indicator the Fed watches) remain