V, U or W-shaped rebound? Temp firms don't see eye to eye
NEW YORK (Reuters) - Staffing industry executives do not see eye to eye on the question of when the U.S. jobs market will stabilize and start to recover, but they are beginning to position themselves for an eventual upturn.
Until recently, companies that provide employment services and temporary workers were focused on bringing costs in line with demand.
Some are now starting to shift their emphasis, amid tentative signs of recovering demand, staffing CEOs said on Friday after the government's jobs report showed fewer job cuts than expected in April.
Roy Krause, who heads Spherion Corp, does not expect to make any further cost cuts in his business, which he said is on track to cut more than $100 million in expenses this year compared with 2008.
"We think we have our costs pretty well balanced," he said. "With any signs of stability, we're going to begin to invest."
Employers looking for flexibility will turn to temporary workers before they commit to full-time jobs, Krause said, so temporary payrolls should turn up, even as overall unemployment continues to rise.
"We are starting to see some stabilization," he said.
Carl Camden, CEO of Kelly Services Inc, agreed, but added a few weeks of stability do not make a trend.
Overtime hours and the length of the work week -- metrics that have barely budged in government data -- need to rise before excess capacity is used up and new hiring is needed.
Camden said it is too soon to know whether the current period will be followed by an upturn, a long plateau with a jobless recovery, or a brief uptick followed by a second dip.
Economists have referred to the three scenarios in shorthand as V-shaped, U-shaped and W-shaped, as a way of illustrating what an employment, or GDP chart, might look like over time.
Camden said a likely outcome is a "slowish" jobs rebound. Kelly Services, which cut costs deeply in 2008, set up scenarios the first quarter of this year that will help it decide when and where to add capacity.
"When demand comes, it comes in a lumpy fashion as opposed to an even fashion, so you have to respond to the lumps rather than waiting for the overall employment numbers to improve," he said. "All of us except Adecco said in the U.S. we were all seeing signs of stabilization on the temp staffing side."
'OVERLY OPTIMISTIC'
Tig Gilliam, CEO of Adecco North America, part of the world's biggest staffing firm, said the rate of decline in temporary payrolls was slowing, but said other staffing companies are "a little overly optimistic" about a turnaround. Continued...
