The “temp jobs lead employment” line (a truism, to be sure) has been floated since that series began to turn up about ten months ago. And, in fact, we have seen almost a year’s worth of growth out of the temp services series which, admittedly, could go on for a while (if, say, we get a repeat of what we saw in the 90s).
But here’s the thing: Temp jobs are now up 19.6% year over year, a record for the series going back to 1990 (when BLS began tracking it). Private sector jobs less temp jobs are still down 0.7% year over year. Historically — and I’ll admit going back only to 1990 isn’t a particularly robust data set — when temp jobs are up over 10% year over year, private sector jobs (less temp jobs) are running in the range, on average, of +2.4% YoY, not -0.7%. In the 20 year history of the series, never has the year over year gain been 10% or more while the private sector (ex-temp) has been negative. This is yet another variation on the theme of whether this may be As Good As It Gets.
The following chart shows the relationship:
Again, we may have a problem on our hands as the growth in temporary jobs has run away from the growth of the private sector. Now, temp jobs could continue setting YoY records — I wouldn’t rule that out at all. However, we do need to see the private sector start to kick into gear and play some serious catch up. As I’ve groused many times before, we’re starting to see late-cycle prints in some series, and we’ve barely even begun to put people to work. Very troublesome, to say the least.