Although private, nonfarm payroll employment has been edging up in recent months, its May reading shows virtually no growth from its year-earlier level. But, as economist Brian M. Jones of Salomon Brothers Inc. points out, the aggregate payroll numbers mask an important development on the hiring front: Personnel firms, which are mainly providers of temporary help, registered a 12-month job gain of 159,000 in April, the latest month for which data are available (chart).
While that number seems like small potatoes in a work force of over 125 million, it's a huge gain for the temporary-help industry. More important, personnel-agency employment has been a reliable leading indicator of changes in total payroll jobs since the Labor Dept. began keeping tabs in the early 1970s.
"For over a decade," says Jones, "year-to-year changes in temporary jobs have been highly correlated with 12-month changes in payroll jobs a month or two later--with each gain or decline of 50,000 temporary positions foreshadowing equivalent shifts of about a million payroll jobs." By that measure, payroll employment growth should soon be racking up year-to-year gains approaching 3 million jobs.
Is such a pickup in hiring feasible? Recent surveys by Manpower Inc. and Dun & Bradstreet Corp. both point to a sharp rise in companies' plans to hire permanent workers in the third quarter. Indeed, with the factory workweek in May stretched to a 26-year peak, manufacturers may now have no alternative to adding bodies if they want to boost output. d&b economist Joseph W. Duncan says his company's survey suggests that business will have increased payrolls by nearly 2 million workers by the time 1992 draws to an end.
Jones isn't so sure, however. Restructuring has boosted companies' permanent reliance on contingent and temporary workers, he notes. And because of continued uncertainty about the current economic outlook, businesses seem afraid to incur the high fixed costs associated with permanent hires. "A meaningful rise in permanent payroll employment," cautions Jones, "may not occur until the economy picks up enough steam to allay employers' fears."
It's far from the end of the slump in commercial real estate. It may not even be the beginning of the end. But it does at least appear to be the end of the sharp market collapse that ravaged commercial property and pushed so many thrift institutions into insolvency.
The Federal Deposit Insurance Corp.'s May survey of real estate experts around the country reveals that for the first time since the fdic began such surveys a year ago, positive assessments of the commercial real estate market slightly outweighed negative evaluations in all four major regions of the country. The sharpest improvement was in the Northeast, where only 14% of respondents reported deteriorating market conditions compared with 48% a year ago.
None of this, of course, implies that commercial real estate will mount a significant recovery anytime soon. Vacancy rates are still extremely high, and some 85% of respondents to the May survey reported an excess supply of commercial real estate in their areas.
Developing countries are hardly strong enough to act as the locomotive for the sluggish world economy, but according to the latest World Economic Outlook released by the International Monetary Fund, they will at least provide a little fuel for the engine. The imf notes that global economic activity actually declined by 0.3% last year, as growth in industrial nations fell to 0.8% and output in former Soviet bloc countries plummeted by 17%.
But the report's real focus is on 1992 and 1993. The imf expects the developed nations to post only 1.8% growth this year, not much to cheer about. The good news is that consumer inflation in industrial nations is expected to continue its decline--from 4.9% and 4.4% in 1990 and 1991 to 3.3% this year and 3.2% in 1993, when their growth is expected to pick up to a 3.6% pace.
By contrast, developing countries are expected to move into high gear this year, moving from 3.3% growth in 1991 to 6.7% and a still respectable 5.4% clip in 1993. At the same time, the imf projects that consumer inflation in developing nations (excluding Eastern Europe and the former Soviet Union) will be cut in half between 1992 and 1993, falling from 37.6% to 16.1%. The agency notes that market-oriented structural reforms, along with deficit reduction and anti-inflationary measures, "have improved the prospects for sustainable growth in a large number of developing nations."
Economist Sam I. Nakagama of Nakagama & Wallace Inc. thinks that "to what must be an uncomfortably large degree for Republicans, the success of George Bush's reelection campaign may rest with decisions made in Detroit." He points out that U.S. carmakers are planning a big increase in production next quarter--pushing motor-vehicle output some 18% over last year's level.
By Nakagama's calculation, such a sizable rise would alone be enough to add about 2 percentage points to economic growth in the third quarter. And that could raise the annual growth rate of gross domestic product to around 4%, when multiplier effects are added to the equation.
The problem for the Administration, of course, is that carmakers' plans are not cast in concrete. Nakagama points out that Detroit was also optimistic a year ago, when auto sales picked up in late spring, but pulled in its horns when car sales began to slump in July. "Since last year's slump in car sales came in the wake of a sharp slowdown in monetary growth," says Nakagama, "it's hardly surprising that Administration officials have recently been trying to jawbone the Fed into boosting growth of M2, which has been shrinking lately."