"Glimmers of hope" in jobs report: staffing execs

NEW YORK (Reuters) - The March U.S. employment report contains early signs that the worst may be over, as some job sectors show at least modest growth, but staffing industry executives caution it is too soon to bank on a sustained jobs recovery.

"There are some glimmers of hope," said Tig Gilliam, chief executive of the North American unit of Adecco SA, the world's biggest staffing company, pointing to a slight pick-up in finance and accounting jobs. Gilliam had also expected a bigger headline decline in payrolls.

The U.S. economy lost 663,000 jobs outside the farm sector in March. Although the job losses were slightly more than forecast and unemployment rose to 8.5 percent, the highest since November 1983, the report did little to alter perceptions that the economy's downward momentum is slowing.

Gilliam said job losses would continue in coming months but the pace was likely to moderate as the government stimulus begins to have an impact, along with looser credit.

"I think we're going to get less negative numbers as we go through the summer," he said, adding that demand among Adecco clients was "leveling" in areas like finance, engineering and information technology.

10 PERCENT UNEMPLOYMENT?

Gilliam expects the U.S. unemployment rate to top 9 percent in coming months, but he does not expect it to reach double digits.

By contrast, Jonas Prising, president of Manpower North America, called 10 percent unemployment "probably likely," since unemployment typically lags the wider economy.

Sectors like health services and education, which showed growth last month, are poor indicators of a wider jobs reversal, he said. Instead, watch areas like temporary staffing and logistics and transport for the first signs of stabilization. These continued to shed jobs in March.

"In terms of absolute numbers, this could be the worst quarter, but unemployment will still go up," Prising said.

In coming months, the positive effects of the government's stimulus should show up in construction, financial services, as well as in health care and education.

Overall, signs may emerge later this year that the recession is ending. At that point, it would count as the deepest in generations, but still a part of a normal business cycle rather that a fundamental resetting of the U.S. economy to a "new normal" level of much slower growth.

"The question is, what is normal after this?" Prising said. "We will have lost 5 million jobs; how quickly are they going to come back, and based on what fundamentals? Is housing going to boom again? Is our manufacturing ability going to resurge? Those are questions that one doesn't really know."

TRADING DOWN

Plenty of reasons for caution remain.

The "real" unemployment rate -- which counts people looking to move from part time to full-time work, as well as so-called "discouraged" workers -- is almost double the official unemployment figure.

Meanwhile, job seekers across all industries and in all parts of the country have shown they are willing to trade down in terms in both skills and pay in order to land a job, Prising said. And workers' hours fell to the lowest on record, partly reflecting companies enforcing furloughs and taking other steps to avoid layoffs.

Therefore, it is too early for a sense of what shape the eventual upturn will take. One possibility is that the U.S. economy will stage a "jobless recovery," Prising said. "We could have a situation where the economy as a whole is doing better, but where unemployment is stuck at 7.5 percent."

(Editing by Leslie Adler)