| NEW YORK
NEW YORK Aug 3 Stronger-than-expected U.S. jobs
growth in July included another large contribution from the
temporary help services sector, lifting shares of staffing
companies in U.S. and European trading on Friday.
The fastest growth in U.S. temporary payrolls in more than a
year also lifted the temp penetration rate -- the percentage of
temps in the workforce -- to its highest level in more than five
years. The rate is still below past peaks and below levels in
other countries, but its steady rise points to the central role
that contract, or project-based, workers play in the labor
Industry executives and analysts expect the temp percentage
rate to reach a record high soon, reflecting caution among
employers amid economic uncertainty as well as a shift in the
nature of American jobs.
The government reported on Friday that temporary help
services added 14,100 jobs last month. The 10 percent
year-over-year growth was the fastest since May 2011. About 2.5
million Americans are counted as temporary or contract labor.
The data was part of a broader employment report that showed
the U.S. economy added 163,000 non-farm jobs in July, above
forecasts of a gain of 100,000. However, the unemployment rate,
based on a separate survey, edged up to 8.3 percent from 8.2
percent in June.
The percentage of temps in the labor force bottomed out in
June 2009 at 1.34 percent. July's rate of 1.91 percent was the
highest since April 2007. The rate is approaching the peak
during the last economic expansion, 1.96 percent in 2005, and
could soon top the April 2000 record of 2.03 percent.
"We're pretty optimistic about the rest of this year and
into 2013," said Joanie Ruge, chief employment analyst at the
U.S. unit of Randstad Holding NV, the world's
second-biggest staffing company by revenue.
"There's a shift in the way companies hire. They want to use
talent on an on-demand basis, when they need them for projects.
I would predict that (temp penetration) number to cross 2
percent and break a record, maybe by the end of the year."
At midday Friday, staffing shares were outperforming the
wider stock market. ManpowerGroup jumped 4.3 percent to
$35.64, Robert Half International added 2.7 percent to
$27.47, and TrueBlue Inc, which specializes in
blue-collar staffing, roes 6.6 percent to $15.30. Kelly Services
and KForce were also higher.
In European trading, Randstad, Adecco and Michael
Page closed up 4 percent or more.
Temporary payrolls have been rising steadily since the U.S.
jobs recovery gained traction in mid-2010, accounting for about
15 percent of all job gains since then.
When temp payrolls spike up or drop sharply, it can indicate
a turn in the wider labor market: an imminent acceleration or a
slowdown. That is not happening now, economists and staffing
experts say. Growth is steady but not spectacular and shows an
uncertain economy, rather than indicating an imminent pick-up in
hiring. Employers are cautious about expanding the permanent
workforce, and are using temps selectively.
Temporary staffing payrolls and hourly wage trends are the
two components of the government's monthly jobs report that are
most predictive of future labor trends, said Chris Varvares,
senior managing director and co-founder of Macroeconomic
Varvares called temp payrolls "a small category that
accounts for a large number of job gains." Temp gains are being
driven by "increased uncertainty about the sustainability of the
expansion," he said.
Over the long term, temporary staffing is growing faster
than other categories because employers in manufacturing and
other industries have grown accustomed to trying out workers
before bringing them on staff, or use temps to lower overall
costs, he said.
Business is steady, said Joel Capperella, vice president of
Yoh, a Philadelphia-based staffing provider of workers for
technology, healthcare and other fields.
"It's not a waterfall, it's more like a steady drip," he
said. "We still see plenty of larger (clients) that are sitting
on cash that are talking about investing, but there's a lot of
uncertainty around the economy, the regulatory impact, what
happens in the election."