Employers cautious but skilled workers needed

By Nick Zieminski - Analysis

NEW YORK (Reuters) - Large employers are more cautious about hiring amid signs of a slowing economy; but few are planning sweeping cuts in their work forces, and workers with specialized skills remain in demand.

A much weaker-than-expected February jobs report clearly raised the risk of recession, but the negative headline number masked strength in some sectors of the economy, like health care and education, staffing company executives said on Friday.

The U.S. economy lost 63,000 jobs outside the farm sector last month, the second monthly loss in a row, defying expectations for jobs being added. The unemployment rate, based on a separate survey, eased to 4.8 percent, partly reflecting fewer people in the labor force, the Labor Department said.

The government report also showed a decline in temporary employment as a percentage of the overall labor force -- a worrying sign, said BMO Capital Markets analyst Jeffrey Silber.

"As a decline in this metric is typically a precursor for an oncoming recession, this is somewhat concerning," Silber said in a research note.

Large employers, especially, are more cautious about hiring, taking longer to vet candidates and having to go higher in the organization to get approval for a hire, said Roy Krause, chief executive of staffing company Spherion Corp.

"The interview process is getting extended, which is typical in a slowdown in the economy," Krause said. He said a slowdown in the service sector was the most worrisome aspect of Friday's report.

Staffing companies are paying more attention to costs than a few months ago, Krause added.