Greg Palmer’s Q3 forecast: Labor Forecast Predicts 6.4% Increase in Demand for Temporary Workers In 2013 Third Quarter

As we do every three months, we are happy to share the news release announcing the
GPalmer Forecast for the third quarter of 2013.

Produced by G. Palmer & Associates, a staffing industry consulting firm based in Orange County, California, the Forecast predicts demand for temporary labor in the United States. It is receiving wide recognition throughout our industry.

— Industry Consulting Firm G. Palmer & Associates’ Quarterly Forecast

                                          Assists in Previewing Near-Term Hiring Patterns —

Newport Beach, Calif. July 10, 2013 – Demand for temporary workers in the United States is expected to increase 6.4% on a seasonally adjusted basis for the 2013 3rd quarter, when compared with the same period in 2012, according to the Palmer ForecastT, released today.

 The Palmer ForecastT indicated a 5.9% increase in temporary help for the just-ended 2013 second quarter.  Actual results came in slightly better than anticipated, at a 6.9% increase.  Results, in part, reflected increasing uncertainty in the economy, where temp help created approximately 13.0% of new jobs reported since the recovery began, while representing only about 2.0% of the total labor market.

GPalmer Forecast since inception

 “Our forecast for the 2013 third quarter follows recent trends demonstrating growth and indicating another increase in demand for temporary workers, marking the fifteenth-consecutive quarter of year-over-year increases,” said Greg Palmer, founder and managing director of G. Palmer & Associates, an Orange County, California-based human capital advisory firm.

 “So far in 2013, the BLS reported an average of 18,800 temp jobs created per month and a total of 112,800 for the year-to-date. The trends point to continued but slightly decelerating single digit temp help growth for 2013.  The BLS report reflects that with only 9,500 temp jobs created in June vs. 23,500 in May, there was a clear deceleration of growth in the quarter, especially when you combine the downward revision of 7,600 jobs for April and May. There were 174,000 temp jobs added in 2012 and 167,000 additional temp jobs added in 2011 over 2010, following an increase of 339,000 temp jobs in 2010 over 2009.” Palmer said.

 The Labor Department reported that a net of 195,000 non-farm jobs were added in June 2013, which was ahead of most expectations.  Of the jobs created, 194,000 were service-related and 8,000 jobs were in the goods producing sectors.  The winners were education and health services at 13,000, leisure and hospitality with 75,000, construction had 13,000 and manufacturing saw 6,000 jobs created. The weak spot in the period was in government where 7,000 jobs were lost. For the most recent three-month period, the moving average of non-farm jobs increased to 196,000 versus 179,000 in May.

 “While these trends show improvement, it must be kept in perspective that between 2008 and 2009, 8.7 million jobs were shed from the economy and roughly 11 to 12 million people are still looking for work today.  These latest statistics all point to a modestly improving labor market, but with an uneven distribution as it relates to new job growth,” Palmer said. “The persistently high unemployment rates continue to have far-reaching effects across a broad spectrum of workers.  Those at the lower end of the job market in terms of skills and education, along with workers in the government, are experiencing the greatest challenges. The unemployment rates have slowly trended down, but discouraged workers opting out of the ranks of seeking jobs have boosted the rates of improvement.”

 The commonly referred to unemployment rate, U3, remained flat at 7.6% in June.  As reported by the BLS, the rate of unemployment for workers with college degrees also remained flat at 3.9%.  The unemployment rate for workers with less than a high school degree during the same period decreased to 10.7% in June from 11.3% in May. The U6 unemployment rate, which tracks those who are unemployed, as well as those who are underemployed and are working part-time for economic reasons, increased by 50 basis points to 14.3%.  The U6 rate is considered the rate that most broadly depicts those most affected by the downturn and measures the rate of discouraged workers.

 The next few quarters.

 “We still expect the unemployment rates to remain stubbornly high for the foreseeable future,” Palmer said.  “One of the key aspects of the high rate continues to be the much talked about skills gap found in available workers, namely, the lack of required skills or education needed for today’s increasing technical and skills-based positions. The key skill areas most severely impacted are those in Health Care, Information Technology, Skilled Trades and those positions that require high degrees of math and science. The gaps in these areas are beginning to widen and could cause pressure on wages in the future, as evidence by a recent McKinsey survey, showing that 40% of companies are reporting that certain jobs are remaining open for six months or longer.

 “One of the most revealing indicators to watch during this uneven recovery relative to Temp Help growth will likely be the Temp Help penetration rate. The Temp Help penetration rate is significant because it measures Temp Help as a percentage of total employment. The penetration rate has continued steady at 1.97% of the total labor market from a low of 1.34% in June 2009. The penetration rate peaked in May of 2000 at 2.03% and hasn’t been this high since April 2007. If current trends continue, it’s expected that the previous peak will be surpassed by year-end,” Palmer added.

 The Palmer ForecastT is based, in part, on BLS and other key indicators. The model was initially developed by the A. Gary Anderson Center for Economic Research at Chapman University and serves as an indicator of economic activity. Companies that employ temporary staff use the forecast as a guide to navigate through fluctuating economic conditions in managing their workforce to meet business demands.

 About G. Palmer & Associates

 G. Palmer & Associates, founded in 2006, provides advisory services in the human capital sector with the purpose to increase shareholder value.  Founder Greg Palmer has served on the board of the American Staffing Association and was president and chief executive officer of RemedyTemp, Inc., one of the nation’s largest temporary staffing companies, prior to its sale in June 2006.  For more inf