Signs hint at weaker job market

Drop in temp hiring, hours worked might presage wider woes.

The U.S. job market is showing signs of weakness. Two key indicators — hiring for temporary-help positions and weekly working hours — have declined this year even as unemployment has remained near a half-century low.

The softening could be significant because it often presages wider weakness in the jobs market. Companies worried about a downdraft in demand reduce hours and temporary staff first before laying off full-time workers.

That’s why economists are keeping an eye on these figures in today’s employment report even as the main payrolls number is expected to show steady hiring.

“The concern is that companies have already cut back on hours and the next shoe to drop is headcount,” said Diane Swonk, chief economist at Grant Thornton advisers.

Unemployment is projected to have held at 3.7%. A separate Labor Department report Thursday showed filings for unemployment benefits were little changed last week, near the lowest level since 1969.

Changes in temporary employment historically have preceded shifts in the overall jobs market by three to six months, said Cynthia Davidson, senior director of research for the American Staffing Association.

Temporary and contract staffing employment fell 4.4% in August from a strong performance a year earlier, after a 3.3% decline in July, according to the association’s regular survey of its members.

Hours worked across the economy remained steady for most of 2018 but began declining earlier this year. The manufacturing industry, which has fallen into a recession amid a worsening global outlook, slowing demand and an escalating U.S.-China trade war, already saw average weekly hours worked drop in July to the lowest level since November 2011.