This means you can kiss your "jobless recovery" goodby.
Temp Hiring Signals Economic Recovery
01.19.04, 9:43 PM ET FORBES
When a struggling North Carolina furniture company informed Larry Nunley that its factories would stay open on Thanksgiving, he was pleased. His AccuForce Staffing, based in Tennessee, provides the manufacturer with temporary workers.
Nunley's windfall may offer the rest of us a reason to give thanks as well. Demand for temps--particularly in the manufacturing sector--has long been considered an economic bellwether. The theory is that once manufacturers sell the inventory they accumulated during the downturn, they tap additional manpower to make more products, and then hire people to market and sell them. Nunley saw a similar surge in demand in 1992, a full year and a half before then-President Clinton declared the economy on a path to recovery. "It smells awfully familiar," he says.
Othon Herrera, CEO of Talent Tree, a Houston-based temp firm, is more cautiously optimistic. Though sales are coming in "fits and starts," Herrera notes that clients--who make everything from fine crystal to boat engines--are planning temp orders six months out instead of on a week-by-week basis.
If these patterns hold, staffing firms could log double-digit revenue growth this year, says Barry Asin, of Staffing Industry Analysts, a research firm in Los Altos, Calif. As for a broader recovery, "There's no perfect correlation," says Asin, "but it's a good sign."
Business Week had a story about this trend two weeks ago, calling the increased hiring of temps :the leading edge of a classic jobs recovery."
Research by Daniel Sullivan, a senior economist at the Federal Reserve Bank of Chicago, and others shows that an uptick in temp jobs precedes an increase in overall employment by three to six months. And with temp jobs beginning to grow last May, sure enough, total nonfarm payrolls began to inch up in September.
The fact that temp employment has picked up since bodes well for more jobs overall in 2004. The temp-job total rose nearly 8% from April through November, when it hit 2.3 million, and could rise 6% to 7% in 2004, estimates the Harris Nesbitt Gerard brokerage firm. Forecasters at Economy.com say that overall payrolls could grow at a rate of 150,000 to 175,000 a month by summer, vs. an average of roughly 100,000 in recent months. "We're on the right track," says Brian Nottage, a senior economist at the West Chester (Pa.) consulting firm.
Those dastardly Bush tax cuts! |
