Temp Staffing Breaks Historic Pattern

Last week we had Rail traffic breaking from trend and increasing as we approach the end of the year. Today it is temp employment that continues to rise as the year ends bucking every year of precedent since the index began. Every year the index has fall from Thanksgiving week through the end of the year. Not this year….

Here is the chart:

Now remember that the index is a leading indicator of NFP by ~3-4 months.  The current strength we are seeing in the payroll numbers was predicted back in Sept when the staffing index began its rise out of its summer malaise.  What we have seen since then tells us very clearly the improvement we are seeing now will continue, if not accelerate into and through Q1 of next year.

When we couple this with what we are seeing in rail traffic (a real time indicator), the current GDP forecast of 2.8% growth (this has risen from the original 2.5%) and Q1 2012’s 2.1% estimates are both too low. Now I am not in the business of predicting 2.5% or 2.6% and too be honest I am not sure 1/10 of point matters in the long run. What I am saying is that the upward revisions have not gone far enough and there is still too much pessimism in the Q1 2012 numbers based on the underlying US activity