An article by William Hester, and analyst with Huffman Research, has gotten a lot of play yesterday and today, for example at Bloomberg and also at The Big Picture, chiefly for his claim that “temporary hiring is an exception, and has continued to deteriorate” rather than getting “less bad”, and that therefore this means a jobs recovery is apparently far off. He says:
temporary hiring is a reliable leading indicator of nonfarm payrolls....
At the beginning of this decade, temporary hiring turned down in April of 2000, eleven months before the 2001 recession began. After the economy weakened, it would end up putting in a double bottom. The first time temporary hiring bottomed was in December 2001, just one month after that year's recession ended. It rose modestly, as the overall jobless recovery began. Interestingly, it turned down again and bottomed in April of 2003, a month after that year's bottom in the stock market. Following the most recent economic expansion, temporary employment peaked in December 2006, a year before the start of the current recession. It's fallen for 20 consecutive months through August, failing to reflect the recent strength in the stock market.
Temporary hiring will almost surely bottom prior to overall employment in this cycle.
There’s no very polite way to put this: he’s simply wrong.
Temporary jobs data has only been collected since 1990 (that's exactly 2 recession bottoms). Did you notice Hester mention that bottom? No, he didn’t. That would be, because both temporary help and total nonfarm payrolls bottomed in the exact same month: May 1990! The only other post-recession bottom in temporary hiring, in April 2003, coincided with the second lowest total nonfarm payrolls number, a whopping 0.02% (that’s 2/10,000’s) higher than the absolute bottom 4 months later in August.
Some “reliable leading indicator,” huh?
And as to his other claim, that temporary jobs data continues to deteriorate at a worse rate, here’s the raw numbers for 2009:
January -89.9
February -73.0
March -57.3
April -53.9
May -0.9
June -29.7
July -7.6(P)
August -6.5(P)
Apparently, continuing to deteriorate at a worse rate includes a loss of only 1/15 of that earlier this year.
So, the real takeaway from Hester’s analysis of temporary help is that we shouldn’t expect total employment to pick up – at least until next month.
May I please have his job? It must be nice to get paid well for being wrong, as opposed to blogging for free.
