A new leading indicator?
The WSJ reports that temps are less in demand in 2007:
Temporary employment, long a buffer that gives companies flexibility, has fallen each of the past six months, and in July was down nearly 2% from the start of the year, according to the Bureau of Labor Statistics.
U.S. revenue at Manpower Inc., the world’s second-largest staffing firm after Adecco Group, dropped almost 9% in the second quarter, as demand fell. Revenue in Kelly Services Inc.’s North American commercial segment — providing clerical and industrial workers — dropped 6% in the quarter. The Troy, Mich., company began seeing a drop-off in business from larger companies last fall, and says it is shuttering about 40 of its roughly 800 North American commercial branch offices.
That is cause for concern because in 2001, a decline in temporary employment began 10 months before a downturn in overall employment. It isn’t clear that is happening now and the link between temp and permanent employment isn’t firm…
Leading indicators of the economy are quite important for policy makers, because they foreshadow the future of US prosperity and employment. As noted in many places: “Examples of leading indicators include production workweek, building permits, unemployment insurance claims, money supply, inventory changes, and stock prices.” A number of these have turned negative in recent months. We’ll see, perhaps soon, if temporary employment is as much of a leading indicator as the unemployment rate is a lagging indicator.