Reuters (08/03/12)

Stronger-than-expected U.S. jobs growth in July included another large contribution from the temporary staffing sector. The fastest growth in U.S. temporary payrolls in more than a year also lifted the temporary penetration rate to its highest level in more than five years. Industry executives and analysts expect the temporary percentage rate to hit a record high soon, reflecting caution among employers amid economic uncertainty as well as a shift in the nature of American jobs.

The U.S. Department of Labor reported on Aug. 3 that staffing services added 14,100 jobs last month. The 10% year-over-year growth was the fastest since May 2011. The percentage of temporary workers in the labor force bottomed out in June 2009 at 1.34%. July’s rate of 1.91% was the highest since April 2007. The rate is approaching the peak during the last economic expansion, 1.96% in 2005, and could soon top the April 2000 record of 2.03%.

“We’re pretty optimistic about the rest of this year and into 2013,” says Joanie Ruge, chief employment analyst at the U.S. unit of Randstad Holding NV. “There’s a shift in the way companies hire. They want to use talent on an on-demand basis, when they need them for projects. I would predict that (temporary penetration) number to cross 2% and break a record, maybe by the end of the year.”

Business is steady, says Joel Capperella, vice president of Yoh, a staffing provider of workers for technology, health care, and other fields. “It’s not a waterfall, it’s more like a steady drip,” he says. “We still see plenty of larger (clients) that are sitting on cash that are talking about investing, but there’s a lot of uncertainty around the economy, the regulatory impact, what happens in the election.”