Recession Red-Flag Rears Its Ugly head At Temp-Help Tumbles

Posted: May 24, 2016 in Uncategorized
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Ahead of the last two recessions, hiring by staffing agencies (ie: temp help) rolled over – it’s now happening again.

Part-time employment has led the jobs “recovery” since the recession, leading to more than one in 50 US workers being employed as temporary help. The Sector has now plateaued, as the WSJ points out.

 

The last two times the temp-help sector slowed down, it eventually rolled over into a recession. If one believes this data point is a leading indicator, then we could be headed straight into yet another recession.

 

Of course, there are two ways of reading this data. The first being that unquestionably the data points to the economy being in trouble. Especially coupled with the fact that the average tenure for a temp employee is on the decline. In 2014 the average engagement was 11.3 weeks, while it was just 10.7 weeks last year.

“It’s the first sector that really begins to lose jobs. If you start seeing those numbers go negative, you’ve got a real problem.” said Donald Grimes, a labor economist at the University of Michigan.

The other way of looking at the data, if you like the way the economy is headed (and .5% growth rates), is to be optimistic that firms are now just shunning part-time help in favor of hiring employees full-time.

“When temp employment is moving sideways, as it is now, it could mean things are frothy and firms are jumping straight to permanent hires. Or it could signal we’re on the precipice of a downturn and firms don’t want to hire, and even start firing temp workers.” said Erik Weisman, economist at MFS Investment Management.

While some try to create noise to justify the slowdown in temporary help saying that swings can be due to younger generation of workers bouncing around to find a work-life balance, the reality is that the economy is slowing crashing, and in looking at the recent PMI data, a recession is imminent.

 

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