Healing US labour market means fewer temporary jobs

NEW YORK: Temporary employment is contributing less to job creation in the US after buoying the labour market in the first six months of the year, a sign employers are more confident about the durability of the economic expansion.

The monthly change in the number of people on payrolls of temporary-help service businesses averaged 2.2 per cent of the monthly gains in total nonfarm payrolls during the July-October period, well below almost 19 per cent in the first half of 2012, based on seasonally adjusted data from the Labour Department.

The steep decline came as the total number of jobs created each month rose to an average of 173,000 in July-October compared with 66,667 in the second quarter. The “significant improvement” shows that companies became comfortable adding full-time workers to their payrolls, said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.

The result is a “double positive” for the economy: more jobs and more of them full-time . While hiring in the four months ended in October still was below the first quarter’s 225,667 average, the recent gains suggest that “bogeyman talk” about business-owner cautiousness was exaggerated, Hoffman said. “This flies somewhat in the face of the notion that employment had been put on hold” leading up to the November 6 elections, he said.

For investors, the decline in new tempservice jobs relative to total hiring is among “a number of supporting data points” showing an improvement in the labour market, according to John Canally, an economist and investment strategist at LPL Financial in Boston, which oversees about $350 billion in investments.

It’s a “positive sign” that businesses feel better about adding people to their payrolls and also gives more assurance to newly hired full-time employees . “From a psychological standpoint, if you have a full-time job, your spending decisions are going to be more optimistic than if you have a temporary job,” Canally said.