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Staffing Hires Expected To Continue Strong Growth, Says New Jobs Survey

April 9th, 2012

Last week’s disappointing jobs report, showed  the U.S. economy added only 120,000 new non-farm jobs in March. That was a surprise to economists and labor analysts, nearly all of whom were expecting the number to be over 200,000.

It was the lowest job growth in five months, and the first time since November the number was below 200,000.Even the usually robust growth in temp jobs seems to have taken a breather in March. Temp jobs dipped by 7,500 during the month, the first time the Labor Department registered a decline in the category since last June.

But even with the blip, there were 8% more temp and contract jobs in March than a year ago. That’s well ahead of the overall jobs growth rate, which in a year-over-year comparison is just under 1.4%.

The government’s unadjusted numbers tell a little more positive story. The nonseasonally adjusted jobs numbers form the Bureau of Labor Statistics show the staffing industry added 29,400 jobs in March. Year-over-year, the increase in temp and contract staffing hit 8.5%.

Using the nonseasonally adjusted numbers for comparison, the U.S. economy added a total of 81,100 jobs last month.

“For the most part, staffing firms continued to see healthy demand in March, as was reflected by the nonseasonally adjusted BLS employment numbers,” says Richard Wahlquist, president and chief executive officer of the American Staffing Association. “In the current environment, businesses are understandably cautious about when and how to add additional flexible and permanent staff.”

Before last week’s job numbers were out, CareerBuilder offered an upbeat view of employment in the current quarter. After surveying some 2,300 HR professionals and hiring managers, CareerBuilder says 30 percent of employers plan to increase their full-time, permanent workforce. Even more — 34 percent — expect they’ll bring on more temps and contract workers.

In Q1, 37 percent of employers hired more temps, an eight point increase over the 29 percent who hired temps in Q1 last year.  The company also says 31 percent of employers report not being to find qualified employees to fill open jobs. That’s up from the 24 percent who said that last year.

But it seems that for every optimistic report, another one turns up with a cautionary note. Today’s is from The Conference Board, a business research organization, that says its employment trends index dropped in March. It’s now at 107.28, down from the revised figure of 107.47 in February. The March figure is still up over 5 percent  from the same month a year ago.

“After five months of strong growth, the ETI declined slightly in March,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board. “Together with the disappointing job growth released on Friday, and only moderate improvement in economic activity in recent months, it seems that employment growth in December to February, averaging almost 250,000 a month, may not be a sustainable trend.”

It may be tea leaf reading, but looking back at least year, March’s decline in seasonally adjusted job growth and temp positions has some echoes of last year, when a May surprise signaled months of mediocre growth.

For a sector with 2.5 million workers, March’s loss of a mere 7,500 staffing jobs  might be nothing more than a statistical aberration and easily dismissed, were it not for April, May, and June of last year when staffing growth turned negative after 19 consecutive months of increases.

When growth turned up again in July, it was slower in each of the next two quarters than in last year’s first quarter, when the staffing industry added 66,100 positions. Even with the negative growth last month, staffing firms added almost 84,000 jobs in the first quarter. That’s a 27% increase over the 1st quarter of 2011.

One other data point is worth looking at, and that’s the number of workers at placement agencies. Counted in this category are employees of chauffeur services, nurse registries, employment firms, state job service offices, casting agencies, and the like.

Changes in employment here provides some indication of economic health. But deciding what the changes mean is tricky because some placement services — the government offices, for instance — added workers to assist the unemployed as the economy was tanking. That said, there is evidence that employment in this category does move in some rhythym with general economic conditions. In 2007, just before the official start of the recession, there were an average of 277,400 workers. Two years later, the average fell to 200,200 workers.

Jobs began returning early in 2010 and the growth continued in all but two months of last year. As of February, there were 240,800 workers employed in the employment placement agencies category.

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