In the current quarter, the Temp Wage Index is likely to remain mostly flat, increasing slightly towards the end of June.
Businesses and government agencies alike are increasingly turning to staffing firms for their talent needs due to increased consumer demand, a greater need for flexibility and the requirements of the new health care act. Automakers, pharmaceutical companies and are all utilizing temporary workers. These workers - full-time and part-time - handle a wide variety of tasks from manning factories and warehouses to working in sales positions.
According to an April 9th estimate by Staffing Industry Analysts, a global advisor on contingent work, staffing industry revenue will increase 6% annually over the next two years to $139.4 billion in 2014. Research Analyst Timothy Landhuis says that the fastest-growing segment of staffing this year will be healthcare, which will grow by 9%. The second-fastest growing segments are information technology and marketing/creative temporary staffing, both of which benefit from the rapid increase in web, mobile and social media technologies.
“We estimate the U.S. temp staffing market is about $100 billion, so 6 percent growth in 2013 translates to $6 billion in new orders, which is a significant increase for the industry.” ~Timothy Landhuis, Staffing Industry Analysts.
Jeff Silber, an analyst at BMO Capital Markets, says that the difference in the current economic expansion as compared with past recoveries is that companies are hesitant to hire even though their businesses are growing and more staff is required.
Energy Sector Plays a Major Role in Global Economic Growth
Recent discoveries of oil and gas reserves have put the U.S. on the path to becoming the world’s largest producer of oil and natural gas. According to economist Douglas Holtz-Eaken, former director of the Congressional Budget Office, domestic energy production “is going to be a real driver of economic growth”. The gains will be reflected through more jobs in drilling and at other energy work sites.
The manufacturing industry will, however, not realize benefits from the rise in energy-related sectors, as “U.S. manufacturing has become so much less energy intensive overall in recent years” says Alan Tonelson of the U.S. Business and Industry Council.
Slowdown of Manufacturing Growth
The manufacturing sector is showing signs of slowing down. The U.S. Manufacturing Purchasing Managers Index by financial data firm Markit is at 52.1 from 54.6 in March, it’s lowest reading since October. A separate report from the Institute for Supply Management shows the industry having only modest expansion. The institution also showed its index of national factory activity falling to 50.7 from 51.3 in March. Economists believe this data indicates slower manufacturing growth for the current quarter.
Job Growth in April 2013
As per Labor Department data, employers added 165,000 jobs in April, exceeding economists’ median forecasts of 148,000 in job gains. Professional and business services led the job additions with 73,000 jobs, trailed by leisure and hospitality at 43,000 jobs, retailers at 29,000, and healthcare at 26,000. The number of Americans out of work for at least six months fell by 258,000 to 4.3 million. Average hourly earnings rose 4 cents to $23.87.
The number of temporary workers increased by 31,000 in April, continuing the upward trend. The temp penetration rate was 1.97 percent compared to 1.95 percent in March. On a year-over-year basis, temp jobs were up 184,200 in April.
Year-over-Year Growth in Temporary Jobs
Temporary Staffing Rises
A report from the American Staffing Association showed that staffing companies in the United States employed an average of 2.9 million temporary workers per day in 2012, up 4.1% from 2011.
Growth in Jobs, 2010 to 2012
Elance, a global online staffing platform, reported that 60% more freelancers were hired in the first quarter of 2013 as compared to Q1 of 2012. The online demand for workers has been very strong so far in 2013 as seen with the 300,000 jobs that were posted on Elance in Q1 of 2013, a significant increase from the 230,000 posted in Q4 of 2012. And given that most jobs on Elance are filled within 3 days, a spike in jobs posted suggests a corresponding rise in freelancer earnings over the coming months. Much of this growth is comprised of demand for highly technical, skilled workers.
“The only other option is to either work full-time people harder or hire temps” ~Jeff Sibler, BMO Capital Markets