Temp agencies monitor: third quarter 2007

Turnover of temp agencies increased by almost 18 percent in the third quarter when compared to the same quarter of the previous year. For the second consecutive quarter, turnover growth turned out lower than in the previous quarter. The sentiment among entrepreneurs is weakening. There are still positive judgements and optimistic expectations for the fourth quarter of 2007, but it’s all less positive than in previous quarters.

Turnover growth past its peak

Since two quarters the increase in turnover of temp agencies has shown a downward tendency. In the first quarter of 2007, turnover growth reached the highest level in quite a while. After 6 quarters with growth rates exceeding 20 percent, the third quarter produced an increase in turnover of nearly 18 percent when compared to the same quarter a year earlier. Nevertheless, turnover growth was still robust and temp agencies made the largest contribution to turnover growth of business services as a whole again. Turnover growth amounts to almost 21 percent over the first 3 quarters of 2007, when compared to the same period last year. When adjusted for seasonal changes, quarter-on-quarter turnover growth has declined for three quarters in a row, measuring 3 percent in the third quarter.  

Year-on-year turnover changes

Increase temp hours levels off further

The number of temp hours also increased less. Growth of temp hours dropped from almost 17 percent during the first quarter of this year to 12 percent in the third quarter. Particularly the number of hours of workers having a contract with a temp agency (stage A) displayed a notable decline during the last few quarters. This is quite common after a longer period of economic growth. With increasing labour shortage, growth of temp hours comes to a halt because enterprises are more willing to change temp contracts into permanent positions. This development is also reflected by a stronger growth of the number of temp hours assigned to work for other companies (stage B+C). In the third quarter, the number of these hours increased by 16 percent. Over the first 3 quarters of this year, the number of stage A hours increased by 12 percent when compared with the same period in 2006, while the increase of stage B+C hours expanded with 18 percent.

Seasonally adjusted index of temp hours

Lower opinions

Results from the Business Sentiment Survey of October 2007 show that the sentiment among temp agencies is slightly worsening. They still reported receiving more orders in the third quarter of 2007 than in the second quarter. However, their satisfaction over these order receipts decreased considerable.  According to the entrepreneurs, selling prices have further increased and workforce also expanded in the third quarter. The opinion on the current economic climate is still very positive. However, the balance of this indicator has dropped from 70 to 35 within this quarter.

Opinions on orders received and economic climate

Entrepreneurs less optimistic in their expectations

The entrepreneurs are still optimistic in their expectations for the fourth quarter, but less then in the previous quarters. On balance 20 percent of the entrepreneurs foresee a further increase in orders received. They also expect prices to increase further. Therefore, turnover is expected to increase further as well. A net 15 percent of temp agencies expect to increase staff numbers in the fourth quarter. Last quarter this balance was 45 percent.

Expectations for the fourth quarter of 2007