Improving Job Market
Brighter Days Ahead? Rise in temporary jobs may suggest a pickup in hiring
By Andrea — CBS MarketWatch
SAN FRANCISCO - The U.S. job market is beginning to show signs of life through increased hiring at temporary employment agencies - often a precursor to a job-market turnaround.
While the U.S. jobless rate hit a nine-year high last month, temporary employment rose 2 percent, adding 44,000 jobs in May, the biggest one-month rise in seven years. In June, employment rolls gained another 1.7 percent, with 37,700 new jobs, according to the U.S. Labor Department.
About 2.2 million Americans worked as temp workers in June, according to the preliminary, seasonally adjusted data.
Economists often consider temp hiring a leading indicator of overall job-market improvement.
“The hiring of temps can be a sign that, even though there’s still some shedding of jobs, firms rather than hiring people back on a permanent basis are looking to meet increased demand with temps,” said Matthew Martin, an economist with Economy.com.
Hiring patterns are following a typical recovery scenario, some temp agencies said, with companies adding clerical and blue-collar jobs to fill out ranks thinned by cuts during the recession, but temp hiring of professionals such as accountants gaining more slowly.
Some false starts last year in which temp job gains were not sustained are leading some to express a cautious outlook for permanent employment.
“We’ve definitely seen an uptick,” said Linda Paulk, president of Snelling Personnel Services, a staffing agency based in Dallas. However, “we are anticipating, based on what employers have told us, that it will be a more gradual approach to full-time hiring” than occurred after the recession of the early 1990s.
The unemployment rate peaked at 7.8 percent 15 months after the recession that ended March 1991. It’s been 19 months since the end of the most recent recession in November 2001, as dated by the National Bureau of Economic Research.
July’s unemployment rate likely will drop slightly, to 6.3 percent from June’s 6.4 percent rate, according to the consensus estimate of economists recently polled by CBS MarketWatch. The Labor Department releases the July data on Friday.
Current job-market signals are mixed. Even as tech-industry giant Microsoft announced last week it plans to hire 4,000 to 5,000 workers, job layoffs continue at other companies, and state budget crises may pull down employment numbers.
For instance, California’s budget, likely to become law by the end of the week, eliminates 16,000 jobs.
In previous recessions, blue-collar and clerical hiring exceeded professional jobs, at least initially, experts said.
“You often see the light industrial and clerical sectors of the temp industry come back first,” said Reesa Staten, vice president of research at Robert Half International, a global staffing agency that focuses on professional positions. “Then you might see, following that, the professional sector,” she said.
Unskilled light-construction workers are finding temp work because of some retailers’ desire to revamp their stores, said Paulk, of Snelling Personnel Services, which fills jobs in light labor, clerical and light technical work.
One client has plans to remodel 750 stores in the year starting September, while their previous remodeling plans averaged about 200 stores a year, Paulk said.
Another retailer has upped remodeling plans by about 50 percent, she said. These firms “are talking about changing, about positioning their companies to take advantage of the economic recovery,” she said.
Other employers are hiring temp workers to ease the burden on their permanent workers. Employers are “running so lean that a lot of the existing employees are burned out,” Paulk said.
“To help retain those employees when the economy does come back, we’re providing a lot of supplemental staffing just to pick up the slack on the work that’s coming in,” she said.
Some industries have been busy enough to continue hiring all types of temp workers throughout the slow economy.
“Health care, biotechnology, real estate are still strong,” said Staten, of Robert Half International (RHI: news, chart, profile), and “may have accounting openings, marketing openings, technology openings.”
She noted that technology firms’ hiring outlook was up in the second quarter, while accounting companies’ outlook remained flat, according to a quarterly Robert Half International survey of chief financial officers.
Investment firms have increased their requests for temporary sales assistants, said Marianne Moore, president of Portland, Ore.-based Action Employment Services, LLC, which places office workers in a variety of industries.
Overall, sales in June reached their highest point in two years, she said. And, the mortgage industry continues to play a big part in temp hiring activity.
“If you’ve been an experienced loan processor, we can place you in four different companies,” she said.
The growth is beginning to be seen at small to medium-sized firms, as well as large companies, said Christian De Conti, a senior vice president for Adecco (ADO: news, chart, profile), a global staffing agency based in Switzerland.
“Especially during the last couple of months we’ve been noticing an increase in medium- and small-sized accounts. They’re coming back,” said De Conti, who oversees the company’s U.S. Northwest region. In that region, Adecco saw a 35 percent increase in sales from May to June, De Conti said.
Insurance companies have increased their demand for workers’ compensation processors, he said, while warehouse distribution also is seeing an increase. General laborers, manufacturing workers and receptionists, were also among the most-requested positions.
Still, De Conti hedges his enthusiasm.
“I wouldn’t say that the economy is coming back or turning completely, but (the growth is) for sure a very positive signal.”
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