Employers are shedding temporary workers at a fast rate, a sign that broader job losses could be on the horizon.
In the last five months of 2022, employers cut 110,800 temp workers, including 35,000 in December, the largest monthly drop since early 2021. Many economists view the sector as an early indicator of future labor market shifts.
Temporary employment declined before some recent recessions and during economic slowdowns. Temporary workers, typically employed through staffing agencies, are easy for companies to bring on board and to let go.
Cutbacks in temporary jobs add to other evidence that companies are adopting more of a cost cutting stance. Corporate job cut announcements are up significantly from a year earlier and business executives are reported somber about the outlook.
The U.S. labor market is historically strong, but showing signs of slowing. Employers added 223,000 jobs in December, which is the smallest gain in two years. Surveyed economists expect higher interest rates to trigger job losses and a recession this year as the Federal Reserve’s interest rate increases proliferate through the economy.