Temp Staffing Index Continues to Climb…Conflicts With ECRI Forecast

Now, it usally does this time of year as it recovers from the post Christmas/New Year. What is of note is that index at 86 is currently 4% higher than at this time last year. This comes after both a shallower end of year drop and sharper beginning of year recovery that is the historical norm.

Given the ~3mos. lead time on the index to NFP, we are looking at improving employment conditions into March of 2012.

Now what is interesting is that ECRI in September ’11 said the “US was already tipping into recession” but they apparently give themselves a 6mos window. I don’t get how 6mos jives with “already tipping” but whatever. The point I make here is that these two data points contradict each other. While ECRI claims to be historically accurate (MISH begs to differ though). Either way, ECRI’s 6mos runs out Feb/March. I think they will be wrong. Why?

The last two recessions unsurpisingly featured a reduction in total US employment (see graph below). Preceeding that drop and recession was a reversal (dramatic) and a beginning of a decline in the temp help sector. So……if the temp help sector continues to climb, we can expect total employment to continue to climbs and…..no recession.

Here is just the index as we usually track it



About the Author

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.