Friday, October 06, 2006

Staffing Slowdown on the Horizon

Is the staffing and temporary help industry slowing down? According to statistics just released by the Bureau of Labor Statistics, it may be doing just that.

According to the Staffing Industry Employment Bulletin, in September, temporary help payroll growth finally stalled altogether — eking out just a slight 0.7 percent growth from the year earlier as reported today by the Bureau of Labor Statistics (BLS). Versus the previous month, temporary jobs were down 11,300; further, the BLS restated downward the temporary job counts for July and August by a combined 15,000. This represents the lowest ebb in growth in what has been a continuing deceleration so far this year.

Nonetheless, temporary help earnings continued strong, up 8 percent in August (these are reported on a one-month delayed basis). The increase reflected a 1.3 percent increase in temporary hours worked and a 6.7 percent increase in average wages paid. These improvements may reflect, in part, a change in mix, as the professional side of temporary staffing, which both works more hours and receives higher pay, is growing faster than the commercial side. At the same time, however, evidence from the Staffing Industry Benchmarking Consortium indicates that temporary help wages have generally been increasing.

Job growth decreasing and wages accelerating. What does this say about the economy for the staffing sector? Sounds like a slight downturn with warning signs of inflation.

If your firm is involved in the temporary staffing and temporary help industry, making sure that you have sufficient working capital is key at this stage of the economic cycle. Revenues may drop off a bit and accounts receivable may be collected more slowly. Factoring is one of the biggest sources of working capital to this industry - now is a good time to make sure that you have sufficient lines of credit to make payroll and meet other operating expenses.

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