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  • mthiker2004 mthiker2004 Nov 5, 2010 5:35 PM Flag

    Uptick in temp hiring, Part I

    From CNBC:

    US Demand for Temp Workers Seen Expanding
    Published: Friday, 5 Nov 2010

    Another large jump in U.S. temporary help payrolls last month, coming amid the strongest private hiring since April, suggests U.S. employers increasingly prefer to take on contingent or contract workers as an alternative to permanent hiring.

    As hiring managers remain cautious about the strength of the U.S. economic recovery, they are turning to temp workers to fill gaps at an accelerating pace. At the same time, gradually improving worker confidence in the job market means more turnover as dissatisfied employees seek greener pastures.

    Both trends—more temps, more turnover—favor recruitment and temporary staffing companies. Whether they also indicate that a wider labor market recovery is in the cards remains to be seen, analysts and industry executives say.

    Manpower, TrueBlue, Robert Half International, SFN Group and online recruiters like Dice Holdings and Monster Worldwide have all reported stronger-than-expected earnings in recent weeks.

    Temporary payrolls rose by 34,900 last month. Seasonally adjusted, temp jobs jumped 23 percent from a year ago, a faster pace of growth than in September. The sequential increase was also ahead of the usual pace, BMO Capital Markets analyst Jeff Silber said in a Friday note to clients.

    "This 'uncertain' environment benefits temporary staffing companies, and we believe the stocks in the group will continue to reflect that," Silber said.

    Overall, U.S. non-farm payrolls jumped by 151,000 in October, far more than expected, with private employment up 159,000. Job losses in the prior two months were smaller than initially estimated, the government said.


    The percentage of temporary workers in the wider labor force, at 1.67 percent, is the highest in more than two years.

    "In our business, what drives recruiting activity is actually more a function of turnover than jobs growth."

    Scot Melland
    Dice CEO

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    • Staffing industry executives have said the rate will likely pass prior peaks above 2 percent as more employers adopt a flexible approach to staffing.

      "Customers are still a little uncertain about the economy and they're supplementing their needs with temporary labor," said Bill Grubbs, executive vice president & COO of SFN Group, adding demand was broadening to areas like information technology and finance.

      "As they bring them on, they realize there's more work to be done and they extend them more than they would have normally.

      They still seem reluctant to bring on some of the permanent workforce until they see stronger economic trends."

      Grubbs said the industry's pace of growth was as fast as he has ever seen and SFN has seen no slowdown in orders since the end of the third quarter. Revenue growth is stronger in professional staffing than in its commercial staffing operations, which recovered earlier and now face tougher comparisons, he added.

      SFN last week reported higher-than-expected profit and sales and said it expected fourth-quarter sales to rise by up to 5 percent from the third quarter. Its shares , which rallied after that report, were down slightly Friday.

      Still, the job recovery is among the slowest on record.

      In typical cycles, demand for temps spikes early on, quickly followed by the creation of permanent jobs. That window is much longer this time, so it is not yet clear that temp job gains are as predictive as in the past.

      "We've never had a spot like this as an industry. When we do, it's short-lived, three to five months, and then you're into a full-on recovery," Manpower CEO Jeff Joerres said last month.

      Though they are encouraged by the trends in their own businesses, staffing executives have mostly shied away from predicting continued strong growth in 2011. A sign of their own confidence, however, is increased recruiting at their firms, according to Northcoast Research. Its staffing hiring index was up 17 percent from the second quarter to the third, and up again from September to October.

      The broadening of temp jobs into professional categories could also indicate a more sustained jobs revival is around the corner. Another encouraging sign, according to recruiters, is that worker turnover is rising.

      Dice Holdings, which runs specialized websites that focus on IT, finance and energy-sector jobs, has seen a spike in worker turnover, said Dice CEO Scot Melland.

      "In our business, what drives recruiting activity is actually more a function of turnover than jobs growth," Melland said. "We've been seeing this increase in turnover, which happens when an economic recovery becomes more real to individuals, who feel more confident to switch jobs."

 
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