As the economy again started off the year on a sour note, the glass-half-full crowd pointed to the strength of the U.S. jobs market as a reason not to worry. As long as payrolls are racking up monthly gains of 200,000 or more, the economy remains in fine fettle, or so the optimists would have it.
Take a peek below the headline jobs data, however, and there are signs that the labor market is losing some momentum. Temporary-help employment, which peaked prior to the last two recessions, is showing signs of topping out. And a broad labor-market index constructed by Federal Reserve economists -- and monitored by Chair Janet Yellen -- has fallen for three straight months, the first time that’s happened since 2009.
"I am a little concerned," said 75-year-old Bob Funk, chief executive officer of Express Employment Professionals, which provides temporary workers to companies. "Our industry is always on the front end of a recession," as provisional workers are the first to be let go on signs of economic weakness.
Temporary-help employment fell in two of the past three months and is down 1.8 percent so far this year -- even while total payrolls are higher. “It’s leveling off," said Funk, who co-founded Oklahoma City-based Express Employment Professionals in 1983. “We ended up 10 percent last year. We’re only up about 2 to 3 percent so far this year.”
In the run-up to the 2001 recession, provisional employment peaked 11 months before the downturn began. The lag before the Great Recession of 2007 to 2009 was 16 months.
The picture is similar for the labor market conditions index, which is comprised of 19 indicators, including temporary help. The six-month moving average of changes in the index turned negative nine months before the 2001 economic drop-off and five months before the more recent recession.
On that basis, broad-based declines among its components turned the average just barely negative last month, suggesting labor conditions may be plateauing rather than deteriorating in a way that would presage a recession.
Few forecasters are saying that an economic downturn is imminent, in spite of a projected further slowdown in the first quarter. Economists at St. Louis-based Macroeconomic Advisers put growth from January through March at a 0.9 percent annualized rate, down from 1.4 percent in the last three months of 2015.
Economists polled by Bloomberg in April lowered their odds of a recession in the next 12 months to 15 percent, from 18 percent in March and 20 percent in February, according to the median calculation.
And even some of Funk’s fellow staffing specialists are voicing confidence in the outlook.