NEWS RELEASE
CORESTAFF COMMENTARY:
ARE WE RECOVERING OR RETREATING?
By Steven Drexel,
CORESTAFF president and chief executive officer
This article is among a series of commentaries written by Steven Drexel discussing
key issues and trends affecting today's labor market. Drexel is a member of the Bureau
of Labor Statistics' Business Research Advisory Council. An archive of past commentaries
may be found at www.corestaff.com/press. Please attribute information to Steven Drexel,
president and chief executive officer of CORESTAFF Services if you adapt all or part of
this piece for articles. If you are interested in connecting with Drexel or receiving more
information about CORESTAFF, please contact Sally A. DeVito Jozwiak at 713-438-1567 or
sally.jozwiak@corestaff.com.
Below, you will find Drexel's remarks on:
- Gross Domestic Product growth
- Employment indicators gaining momentum
- A solid outlook
December 2004 - Now that the election is finally behind us, the outlook for the economy and labor markets is
generally positive, but not overwhelmingly so.
The broader economy is solidly growing, albeit at a slower pace than in five of the last six quarters. Average quarterly Gross
Domestic Product (GDP) growth during the last six periods was 4.6 percent. The third quarter of 2004 is estimated to have
grown by 3.9 percent. GDP growth over the next five quarters is expected to be 3.5 percent. Most of this step-down is the
natural return to the long-term trend rate following the post-recession rebound during 2002 and 2003. Furthermore, the projected
3.5 percent growth rate is respectable and sufficient to maintain a decent economic environment.
What about the labor markets? In contrast to the broader economic metrics, the employment indicators are gaining momentum. Why
would the labor market be gearing up when the broader economy is gearing down? Because the labor market recovery has lagged behind
the broader rebound. Productivity growth was exceptional during the last three years due to advances in technology, globalization
of the labor force and aggressive expense management by cautious employers. The labor market improvement reflects the fact that,
over time, GDP growth soaked up much of the excess capacity created by the recession and technological advances. Also, uncertainty
due to security, geo-political issues and accounting scandals is less acute over time.
Which labor market indicators point to an improving picture? The new jobs report for October was a barn burner. With 337,000 new
jobs in October on top of positive revision to the previous two months, it is hard to argue that job growth is not accelerating.
Other indicators to note:
- Initial claims for unemployment insurance continue to trend down. The moving average hit its lowest level since November 18, 2000.
- Continuing claims are 19 percent improved over prior year and continue to trend downward.
- The Institute for Supply Management’s employment indexes continue to signal growth in manufacturing and non-manufacturing industries.
- The National Association for Business Economics reports that the October survey suggests the employment index reading is in the top 15 percent of all surveys dating back 22 years.
- Finally, announced layoffs were down in October, improving 6 percent sequentially and 41percent over prior year.
On balance, the general outlook is solid and the employment outlook is improving.
FAST FACTS
Temporary Employment Has Grown Faster Than the Total Workforce since 1990
Total Workforce
Temporary force
Sources: U.S. Bureau of Labor Stitistics and Staffing Industry Analysts, Inc.
Currently, more than 2.3 million people work in temporary assignments on any given business day in the United States. This number is more than double 1990 levels. Comparing the trends of the
temporary (bottom graph) and total U.S. workforce (top graph) makes clear that temporary employment has grown at a much faster rate, but it suffered a substantial drop between 2000 and 2003.
Temporary employment has been growing fairly steadily since early 2003, a good sign for the economy.
Searching for Temporary Employment
- Google hits on "temporary work": 6,570,000
- Google hits on "seasonal work": 2,740,000
- Google hits on "contingent work": 976,000
Ratio: 6.7 : 2.8 : 1
Sources: Google and Staffing Industry Analysts, Inc.
Additional Observations:
- November Unemployment Number –
It will be 5.5 percent.
It is likely that the increase in new jobs will be offset by more job seekers entering the labor market.
- The impact of holiday employment on the labor force
Holiday-related employment has a positive effect on retail, logistics and distribution jobs. The impact
on the unemployment rate is not dramatic because much of the surge is absorbed by students or individuals working second jobs.
About CORESTAFF Services
CORESTAFF Services is one of the largest national staffing firms in America, with offices in 19 states. CORESTAFF also operates as
TeleSec CORESTAFF in the Washington, DC area and Leafstone Staffing Services in the New York City and northern New Jersey metropolitan
areas and southern Connecticut. CORESTAFF is not affiliated with Core Staffing Services, Inc. which operates in the New York Metro
Area. CORESTAFF is headquartered in Houston, Texas; 713-438-1400.
Visit CORESTAFF Services on the Web at: www.corestaff.com, www.it.corestaff.com,
www.careertrust.com, www.techresources.coretaff.com, www.infocurrent.com
and www.employmentzone.org.
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