The Wall Street Journal reports Demand for Temp Help Cools

Demand for temporary help is cooling. An index of temporary and contract employment, based on a survey of staffing firms, was 1.1% below its year-earlier level for the week ended Nov. 27.

Temporary employment often is viewed as a good gauge of the labor market’s overall health, but it can slip when employers sign temporary workers on to permanent positions.

To put the above chart in better context, here is a chart of ASA Temporary and Contract Employment Index by the American Staffing Association since 2006.

Year-Over-Year Comparisons 2006-2011

Since week 33 (mid-August), demand for temporary and contract help is below where it was for the same week in 2010. Although 2011 is substantially better than 2008 and 2009, it is now lagging 2010 and considerably lagging 2006 and 2007.

With the labor force dropping y-o-y by 67,000 vs. an expected increase of 1.5 million (125,000 per month), (see Unemployment Rate Dips to 8.6% as 487,000 Drop Out of Labor Force) it is hard to believe this decline is due to employers signing temporary workers on to permanent positions.

Instead, consider the possibility employers are slowly dumping temps and contract workers, and permanent employees may be next.

Mike “Mish” Shedlock
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