ASA Staffing Index Improving

   I like to follow the ASA's weekly staffing index because it provides a timely indication of changes to the number of people employed in temporary and contract work. Theoretically, a surge in temporary hiring has been a leading indicator of future employment. This has not been the case during the current economic cycle, demonstrating that corporations are still cautious about the future economic outlook. They seem willing to hire temporary help but are not confident enough to hire permanent employees.

    I have complied a chart which plots the SP 500 (weekly) with the ASA staffing index for the last 2 years. You can see from the chart below that the ASA index and the SP 500 have positive correlation, except for the last 3 months. While the SP 500 has fallen, the ASA index has continued to increase, creating a positive divergence. Will the SP 500 follow?

Side Note: The big plunge late in the year in 2009 was consistent with the seasonal pattern when employers cut temporary workers after the buildup for the Christmas holiday.

Black Swan Insights

ASA Staffing Index Improving