US jobs picture may be weaker than data shows

The US economy has been adding jobs at a steady clip, a government survey of employers showed on Friday, but there are signs the labour market may not be as strong as the data suggests.
Temporary employment is falling, labour force growth has slowed, the number of employees working part time to make ends meet has risen and jobs growth, as measured by a separate survey of households, has been cooler.
In addition, the so-called quit rate, a gauge of the pace at which people leave the work force, is declining, suggesting workers are leery about their ability to find new employment.
While manufacturing and construction payrolls have shrunk over the past year - with all the nation's job growth coming from the services side of the economy - many economists believe the drop in construction employment is understated. If the true extent of the housing downturn were reflected, they say, overall job gains would not appear so strong.
"The job market has remained surprisingly sturdy despite the severe housing downturn. Nonetheless, the job market isn't as strong as the top-line job statistics suggest," said Mark Zandi, chief economist of Moody's Economy.com in West Chester, Pennsylvania.
A decline in temporary employment has drawn the attention of economists. While businesses have taken on a steady stream of new hires, they have reduced their reliance on temporary workers in recent months, a trend last seen around the 2001 recession.
"It does seem to me that companies today manage the surges in their business with the hiring of temporary workers, and when you start to see that drop it means that companies are not experiencing the demand," said John Challenger, whose Chicago-based firm tracks corporate lay-offs.
Temporary employment has been off from year-ago levels in each of the last five months. In June, it was down 1.6 percent from the same time a year ago. Some analysts also question the way the Labour Department accounts for the creation of new businesses and the demise of old ones - an estimate it uses to adjust its monthly employment count.
While the department has the option to re-estimate the models it uses to come up with new business births on a quarterly basis, it has never done so. Instead, the department will recalculate these models when annual revisions to payroll data are released early next year. The upcoming revision, which will reconcile the job count with unemployment insurance tax records, is expected to show employment has expanded more slowly than had been thought.
In particular, many economists think the so-called birth-death model may have undercounted the number of construction firms that have folded in the recent housing downturn.