January 7, 2011 / 6:02 PM / 8 years ago

U.S. staffing execs discount weak jobs report

NEW YORK, Jan 7 (Reuters) - A weaker-than-expected U.S. jobs report, including a slowdown in the growth of temporary payrolls, paints a bleaker picture of the current jobs recovery than do business conditions, staffing industry experts say.

The government jobs data for January and February will be more meaningful, executives said on Friday, after the government showed 103,000 jobs added outside the farm sector last month, far fewer than forecast. [ID:nN06134458]

For a graphic, click on r.reuters.com/bup35r

The government report, which showed the unemployment rate dropping to 9.4 percent as discouraged workers stopped looking for jobs, also showed about 16,000 temp jobs were added last month, about half the pace of the two prior months.

“We get a dip in December every year,” said Joel Capperella, vice president of Yoh, a Philadelphia-based staffing firm, a division of privately held Day & Zimmerman, which specializes in information technology and other white-collar fields.

“When February’s comes out in March, that will be the tell-tale sign if things really slowed down,” he said.

Temporary workers account for less than 2 percent of the total U.S. labor market, but demand in the sector is widely seen as an indicator of wider trends, since employers rely on contingent workers during times of uncertainty, such as the early stage of an economic rebound.

The 500,000 jobs added in temporary help employment since the sector bottomed in 2009 have accounted for about half of all U.S. job growth in the recovery so far. If the current recovery follows historical trend, the proportion of temps in the workforce could reach a record 2.66 percent, according to BMO Capital Markets.

“This relatively stable employment environment is still beneficial for temporary staffing companies,” BMO analyst Jeff Silber said in a Friday research note.

U.S. staffing shares were lower in midday trading on Friday. Manpower Inc (MAN.N) fell $1.66 to $63.86, TrueBlue (TBI.N) Inc. lost 64 cents to $17.01, while SFN Group SFN.N dipped 34 cents to $9.82, and Robert Half International (RHI.N) was down 5 cents at $31.72.

SLUGGISH RECOVERY

Some evidence of continued demand for temps comes from rising wages. A Yoh survey showed temp wages rose sequentially each month last quarter after falling in the first nine months of 2010, rising 4.4 percent from November to December.

Wages for full-time workers also appear to be rising. The average for all private, non-farm workers was $22.78 per hour last month, up 4 cents, according to the Labor Department.

“Companies have to pay slightly more for professionals coming in the door than they were earlier in the year,” said Scot Melland, chief executive of Dice Holdings Inc (DHX.N), which runs websites focused on technology, healthcare and other professional job categories.

Melland called Friday’s jobs data a continuation of the slow, steady improvement that has characterized the recovery so far, and said a slight decline in Dice.com tech job postings this month was typical of the season.

“I fully expect the job count to bounce back in January as people get back to their jobs and start recruiting again,” Melland said.

For a jobs recovery to take root, hiring needs to broaden to more professional categories, staffing industry experts say. Growth in temp payrolls has been led so far by areas like light industrial and clerical staffing, which offer lower margins.

Client demand is picking up in areas like engineering, mortgage processing, and technology, said Tig Gilliam, who heads North American operations for Swiss-based Adecco SA ADEN.VX, the world’s biggest staffing company.

“The data still says 2010 was the year of the beginning of the jobs recovery,” he said. “It’s going to take 2011 and 2012 before we can say the recovery happened.”

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