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Employment Services Industry Data Signals December Employment Growth

By Charles Thibault on December 9, 2009 in Staffing Industry.

The Employment Services industry has been growing over the past 4 months, according to data from the Bureau of Labor Statistics. This is important because over the past 20 years, the Employment Services industry has lead the rest of the economy both entering and exiting new business cycles – by about 4 months. Recent gains in the Employment Services industry means that US Nonfarm Employment could grow in December.

Movements in the Employment Services industry lead the rest of the economy because of the nature of temporary workers. When the economy is in a downturn, it's easier to end a temp worker's contract that to lay someone off. In an economic upturn, it's less risky to hire someone first as a temp, with the possibility of permanent employment to follow.

The graph below shows employment changes over the past 11 months in the Employment Services industry, the Temporary Help Industry sub-category, and total US Nonfarm Employment. (Changes to Employment Services employment and Temporary Help Services employment are on the left axis, and the change in Nonfarm Employment is on the right axes).

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Employment Services industry on hiring watchlist

By Juli Morris on March 24, 2009 in Staffing Industry.

As the U.S. and other economies continue to battle the recession, hopeful market sources seek forecasters on both sides of the downturn. As such, many focus on the Employment Services Industry (ESI) as an indicator.

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A key reason: the ESI includes temporary staffing services. If the economy slows, firms are likely to hire temporary positions initially before making commitments to bringing on permanent employees.

WANTED HDI data demonstrates ESI hiring activity typically decreases before overall non-farm employment slows in the path of a recession. However, the ESI fails somewhat as a recession exit indicator. The over-the-year changes in the ESI at the back end of a recession seem to reflect total non-farm employment trends more than they move ahead of the general curve.