Demand for temp workers remains strong

By Reuters
Posted Dec. 3, 2010 at 12:52 p.m.

The U.S, economy added the highest number of temporary jobs last month since January, suggesting U.S. employers remain concerned about the pace of the U.S. recovery and are reluctant to step up permanent hiring.

Concrete evidence remains elusive that temp jobs — traditionally a leading indicator of full-time, or “perm” hiring — will soon translate into robust jobs growth.

A much weaker-than-expected November jobs report Friday raised new questions about whether the fragile recovery was running out of steam, as it contrasted with recent signs of a stronger manufacturing sector and returning consumer demand.

U.S. temporary payrolls were up 19 percent in November, a slower year-over-year increase than in the previous four months, but the 39,500 temp jobs added last month marked the highest number of new temp jobs since January.

Overall, temporary help payrolls are up by almost half a million since they bottomed in September 2009, according to the Department of Labor.

The percentage of temps in the U.S. workforce has jumped since the recession ended last year and now totals 2.2 million positions. Industry executives expect that so-called penetration rate to surpass its prior peak of 2 percent.

“This ‘uncertain’ environment may be a godsend for temporary staffing companies,” said BMO Capital Markets analyst Jeff Silber in a research note.

“Temp growth continues to be strong,” said Tig Gilliam, who heads North American operations for Swiss-based Adecco SA , the world’s biggest staffing firm. He said year-over-year growth is inevitably slowing since the recovery in temp jobs is now well into its second year.

Employers remain concerned about whether recovery can be sustained, Gilliam said. “It’s not that perm isn’t recovering. It’s just a pretty anemic pace at this point.”

Nonfarm payrolls rose by only 39,000 last month, with private hiring gaining only 50,000, both well below the job gains economists had forecast. The jobless rate jumped to a seven-month high of 9.8 percent.


Unemployment rate graphic:

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Shares of U.S.-listed staffing companies were mixed in afternoon trading, after opening lower. The biggest, Manpower Inc, was up 1 percent to $59.43. Hudson Highland also rose, while SFN and TrueBlue Inc were slightly lower.

Roy Krause, the chief executive of SFN Group, said client demand for temps was gradually shifting from early-cycle categories like industrial workers to more white-collar areas like technology.

“I don’t see any acceleration but I do see continued moderate expansion,” Krause said. “There’s a lot of uncertainty in the market that plays to the temporary side of the business.”

Demand for white-collar temps may be coming at the expense of full-time jobs, however. The unemployment rate among college-educated workers, while still lower that the overall national average, rose to 5.1 percent last month, from 4.7 percent.

U.S. employers are less likely to hire professional-level staff over the coming quarter than they were three months ago, even as more express optimism about business prospects, according to a survey by specialized staffing company Robert Half International Inc.

Of the 4,000 executives surveyed about first-quarter hiring projections, 10 percent said they would increase staff levels, down 1 point from the previous quarterly survey. Five percent will cut staff, unchanged from the prior survey.

Robert Half’s survey found the best hiring prospects in professional services firms, especially law firms that cut staff too deeply during the downturn. Job prospects have worsened in finance, insurance and real estate, by contrast.

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