Staffing Industry Continues to Stay Positive

Let’s hope the good news will continue!

Based on a recent industry wide survey (by PSG Global Solutions), the overall trend for staffing companies continues to be on the plus side for the 3rd Quarter and indicates a strengthening in the 4th Quarter 2010. Here are some of the highlights include:

• The percentage of staffing firms indicating a "strong" business climate more than tripled vs. last quarter (35% of respondents today, vs. 10% last quarter)
•  Conversely, the percentage of companies indicating a "weak" climate dropped by more than half, to 14% of companies (from 31% last quarter)

Further, for the first time since 2008 respondents as a group felt that business was better than average and is expected to continue into next quarter. In fact, 63% of companies are expecting quarter over quarter improvements going into Q4. 

By Sector
This quarter saw the various staffing sectors split into two broad groups:

• Engineering, Light Industrial / Skilled Trades, and IT: Each of these sectors is seeing a good amount of strength in the market, with a sizable portion of respondents commenting that they are having a tough time keeping up with demand.
• Administrative/Clerical, Finance/Accounting, and Healthcare: These sectors continue to feel the effects of the recession, although it's worth noting that within these sectors there are significant differences across subsectors
  • In healthcare, for example, the nurse subsector continues to suffer, while some allied subsectors, such as therapy, are seeing a fair amount of strength.

By Size

Here is one sour note!  Smaller businesses are still suffering more than the larger companies.  As has been the case in recent quarters, the strength of a staffing company's business continues to be closely linked to size, with larger firms consistently outperforming smaller ones. Digging a bit deeper, however, 65% of smaller staffing companies (those with <20 internal employees) report that business is better than average, indicating that the lag among smaller firms is driven by a small subset of the group that continues to struggle.

Conclusions

With over three times as many companies reporting a "strong" operating environment today vs. last quarter, the positive performance trend of the industry is clear. And while there are sporadic concerns that the current trend will falter a bit in coming months, the broader view is that the industry will continue to gather strength over the balance of 2010.

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