Analysis: Private employers hire more in June

NEW YORK (Reuters) - Business at staffing firms is more robust than government labor market figures would indicate, industry executives said after a weaker-than-expected report on last month's nonfarm payrolls.

The U.S. economy lost 125,000 jobs outside the farm sector in June -- the largest decline since October -- as census jobs fell 225,000.

But private hiring rose 83,000 after increasing only 33,000 in May, as anxieties about the about the possible impact of the European sovereign debt crisis on their business receded.

Employers are concerned about what is happening in Europe, but it is no longer affecting hiring decisions, said Scot Melland, CEO of Dice Holdings Inc, which runs the Dice.com technology job site.

"This really continues the trend of slow, steady growth in private sector employment. It's not a bad jobs report, it's an okay jobs report," he said.

Still, even the 83,000 increase was lower than the 112,000 jobs analysts expected [nOAT004655] and the news nicked the shares of some staffing companies.

"There's an overreaction here in the market," said CEO Roy Krause of SFN Group Inc, whose shares were down 3.2 percent at $5.19 per share during mid-day trading.

Dice Holdings shares were up 0.4 percent at $7.

Analyst expectations are unreasonably high, Melland said.

"Everyone continues to expect a huge "V" in private sector hiring," he said. "We're not getting that. But we're getting a steady increase. We're heading in the right direction."

NO DOUBLE-DIP

A soft patch in the economy is typical at this point in a recovery, said economist John Canally of LPL Financial in Boston.

He pointed out that, in seven of the past eight months, the private sector has added jobs.

"I just don't see a double-dip," he said.

Temporary hiring, a leading indicator of permanent hiring, was up 21,000 in June and has risen 379,000 since a recent low in September 2009.

Of temporary categories, the light industrial sector, which includes such jobs as distribution and packing, is seeing the most demand, Krause said. Companies are also hiring clerical and administrative workers, including those in call centers.

"There's clearly been a shift in the mind of corporate America," said Melland. "They are still being conservative, but they are hiring, and they are recruiting."

The number of jobs posted on Dice Holdings' career site for technology and engineering, Dice.com, saw a 36 percent increase year-over-year, he added. Likewise, job postings on eFinancialCareers.com, the site serving the financial services industry are up 32 percent.

Searches of Dice Holdings' resume databases also continued a positive trend, rising in the second quarter over the first quarter, which was stronger than the fourth quarter of last year.

Not enough employers have made that key shift from temporary to permanent hiring, both Krause and Melland acknowledged.

"Companies that we speak to are generally confident about their business prospects, but are unsure about how the environment may change over the coming year," Melland said.

The June jobs report could have been worse, but it was not good, wrote Nigel Gault, the chief U.S. economist for IHS Global Insight.

Still, even he does not believe the economy is heading into another downturn.

Manpower Inc's shares were down 1 percent at $42.65 on the New York Stock Exchange, while those of Swiss staffing giant Adecco SA, which has a North American arm, were down 0.7 percent at $49.78.

(Reporting by Helen Chernikoff; editing by Andre Grenon)