Expected US temp hiring lifts staffing company shares

* More than 137,000 temp jobs have been added in 2012

* Businesses hiring part timers, who tend to be temps

* Wariness of hiring full-timers ahead of "fiscal cliff"

By Lynn Adler

Oct 5 (Reuters) - Businesses wary about the U.S.presidential election and the outlook for fiscal policy willprobably hire temporary workers in the fourth quarter ratherthan full timers, a view that lifted staffing company shares onFriday.

A surprise drop in the U.S. unemployment rate to a nearfour-year low of 7.8 percent and creation of 114,000 jobs inSeptember, along with improving consumer confidence, suggestedthat employers are filling more jobs, analysts said.

Though the temporary help services category showed a declineof 2,000 in the month, analysts noted a 582,000 jump in thenumber of Americans who want full-time jobs but are working parttime. That shows businesses are reluctant to commit to permanenthires, they said.

The September decline in temp hiring was small, consideringthat more than 137,000 temp jobs have been added this year.

"Businesses are hiring part-time workers, and many of theseare indeed temporary because companies do not have any long-termcommitments nor do employees in many cases have an intention ofstaying long-term," said Sung Won Sohn, economics professor atCalifornia State University Channel Islands in Camarillo,California.

At midday Friday, staffing shares mostly outperformed thebroader stock market.

TrueBlue Inc , which specializes in blue-collarstaffing, jumped 1.4 percent to $16.30. Kelly Services Inc

rose 1.8 percent to $12.95, Kforce Inc rose 2percent to $11.80 and Robert Half International added0.8 percent to $26.46. All outperformed the S&P 500 stock index,which was up about 0.2 percent.

Manpower Inc shares were unchanged at $36.94.

In European trading, Randstad Holding NV , Adecco SA

and Michael Page International Plc closed up2.4 percent, 2.5 percent and 0.4 percent respectively.

A sub-8 percent unemployment rate will stoke consumerconfidence and boost staffing needs, analysts said.

"As payroll hiring increases, temp hiring will increase aswell, and it will probably still have a bit of an outsizedincrease simply because of the uncertainties on taxes and thefiscal cliff," said Steve Blitz, senior economist of ITGInvestment Research.

The fiscal cliff refers to the year-end deadline for about$500 billion in expiring U.S. tax cuts and automatic spendingcuts set for next year unless Congress can compromise overlowering the budget deficit.

"People will want to take on labor to reflect the increaseddemand, but they don't necessarily want to take on labor and therelated benefit and severance costs if the worst comes to pass,"Blitz added.

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But many Americans have stopped looking for work or areunderemployed, and likely will remain so for some time.

"Why CEOs and executives are almost frozen is that there isa lot of guesswork as to what taxes are going to look like, whatregulations are going to look like, what healthcare costs aregoing to be," said Steven Raz, partner with Cornerstone SearchGroup in Parsippany, New Jersey, which specializes in recruitingfor the pharmaceutical and biotechnology industries.

Raz said at least 70 percent of the executives he deals withthat would be adding permanent jobs are not optimistic becauseof the lack of clarity on taxes and other regulations.

"Half of all college graduates are sitting on their parents'couches, millions and millions of Americans are just out ofwork, and the duration of time people are on unemployment hasbeen ticking up," he said.

Chad Oakley, president of executive recruiting firm CharlesAris Inc in Greensboro, North Carolina, said the United Statesemployment market is a tale of two recoveries.

Potential employees with a four-year or advanced degree inthe sciences, math and engineer can have their pick of jobs, hesaid.

However, "with lesser educated employees, we believe thevast majority of those individuals will be perenniallyunder-employed," he said. "They may find a job, but their bestjobs happened in the past."

(Additional reporting by Lucia Mutikani in Washington; Editingby David Gregorio)


Messaging: lynn.adler.reuters.com@reuters.com))