(Correcting August’s change in fourth paragraph in article published yesterday.)

Sept. 8 (Bloomberg) -- U.S. companies are still reducing the ranks of temporary workers, showing that any rebound in overall employment won’t happen soon, according to William Hester, an analyst at Hussman Econometrics.

The CHART OF THE DAY compares the number of temporary employees with nonfarm payrolls since 1990, according to data compiled by the Labor Department. Increases in the number of temporary jobs in 1991 and 2003 preceded similar recoveries in payrolls, as the chart illustrates.

“Temporary hiring is a reliable leading indicator,” Hester wrote yesterday in a report that featured a similar chart. Last month’s decline in these jobs was “one of the most discouraging data points” in the latest employment report, he added.

The number of temporary workers dropped by 6,500 in August to 1.74 million. The total has fallen each month since January 2008, a month after the current U.S. recession officially started. During the 20-month streak, temporary jobs have declined by 33 percent.

Further losses “would probably push back any recovery in nonfarm payrolls,” Hester wrote. “Temporary hiring will almost surely bottom prior to overall employment.”

Separately, Manpower Inc. said today in a statement that its index of U.S. companies’ hiring plans set a record low for the third straight quarter. The latest reading was based on the outlook for fourth-quarter jobs. Manpower, the world’s second- largest staffing firm, began compiling the gauge in 1962.

(To save a copy of the chart, click here.)

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net

Last Updated: September 9, 2009 08:59 EDT