Unemployment rate stuck at 9.6 percent. Will holiday hiring help?

Unemployment rate remains relatively high, but demand for temp workers is rising. Holiday hiring will add to the pool of temporary jobs. Still, few firms look set to 'staff up' significantly, as they watch for a shift in consumers' mood.

The unemployment rate for October stayed stuck at 9.6 percent, but one bright spot in the jobs report is the rising demand for temp workers.

Of the 151,000 jobs added to the economy last month, 35,000, or 23.2 percent, were for temporary services, according to the Bureau of Labor Statistic. Says Bill Grubbs, chief operating officer of SFN Group, a national temp supplier based in Fort Lauderdale, Fla., “the pace of growth is the fastest we have ever seen.”

Now the temp industry is getting ready for an even larger hiring spurt – hundreds of thousands of holiday-season workers.

Before December, CSN Stores, a Boston-based online retailer of home goods, plans to add 100 new workers, including software engineers, to help with promotions.

In Denver, Alpine Access is looking to staff up with more than 500 customer service "Internet athletes," who during the holidays will take sales orders and answer technical questions about computer programs.

And in the weeks ahead, some department stores and big-box stores such as Macy's and Best Buy will be hiring tens of thousands of part-time helpers, including gift-wrappers, warehouse workers, and security guards.

All those jobs will help people who are out of work – even if they are not a permanent answer to their prayers. Even so, preholiday surveys indicate that hiring for the holidays, much like the rest of the jobs picture so far, will be sub-par. Actual hiring so far is off by about 10 percent compared with last year, which was a bad year, according to one usually accurate sampling.

"This year looks to be slowest for holiday hiring since the beginning of the recession," says Robert Yerex, chief economist for Kronos, a Chelmsford, Mass., company that samples 67 companies and publishes the Kronos Retail Labor Index, which tracks retail hiring trends.

In its annual forecast, Chicago-based outplacement firm Challenger, Gray & Christmas says two consecutive months of positive sales gains may give retailers a little more confidence to add workers. But the number of holiday workers added is likely to be less than prerecession levels, Challenger says.

The number of hires during the holiday season can vary greatly. Last year, retail payrolls hit 501,400, up 54 percent from 2008, when holiday hiring fell to a 22-year low with only 324,900 extra workers, Challenger says.

At the same time, it’s getting harder to predict what big retailers will do because they are waiting later to make hiring decisions.

"The timing of the spike of the hiring is getting later and later every year, so it's possible there will be a significant amount of hiring before the holidays are in full swing," says Mr. Yerex.

Reasons for the delay are varied. Some retailers waited to see how their Halloween sales went, says Craig Rowley, Dallas-based vice president at the retail sector of the Hay Group, a consulting company. “Halloween sales went pretty well. The consumer bought more discretionary items, and that’s given heart to retailers,” he says.

Other companies may wait to see if the national mood changes after the midterm elections, says Yerex. "There are literally dozens of issues relating to the economy that depend on what happens, such as extending the Bush tax cuts to everybody or just the middle class," he says. "Business is very sensitive to any fixed outlays before they get a better picture of what happens after the election."

But many companies are not waiting. At CSN Stores, Niraj Shah says it's important to the company to be staffed-up for the holidays. "We grow by offering customers really good service, and if you are short-staffed, you are in a tough position to offer that service," says Mr. Shah.

Some of the seasonal jobs may become full-time positions, he says.

"Basically, if we keep growing, we need to hire," he says, noting that CSN's business has grown nearly 50 percent this year.

Some companies in the hiring mode say their rising business may reflect a nascent turnaround in the way consumers think. That's the case at Sittercity.com, which is experiencing a sharp increase in people looking for child care.

Melissa Marchwick, the chief brand officer for the Chicago-based company, says people are already trying to book child-care services for Black Friday (the day after Thanksgiving), the holiday party season, and New Year's Eve.

"On the basis of our 80 percent rise in job postings, I think people's attitudes are starting to change," says Ms. Marchwick. "They are getting back to a more normal behavior."

During the holidays, people also have more questions about their credit cards, and they don't have a lot of time to wait for customer service representatives. That's one reason large companies outsource their call center services to companies like Alpine Access, whose 500 temps will work from home.

"They have to be comfortable having multiple windows open with several programs running simultaneously while they are on the phone," says Remi Killeen, human resources project manager for the company, which is on-track to grow 40 percent this year.

Companies such as Alpine Access should have no trouble finding good candidates, says Yerex, who says there is a "robust" pool of willing workers. For example, the 67 companies he samples expect to hire 150,000 to 165,000 people this holiday period.

But he estimates the total number of applications for those jobs will be 4.5 million. This means only 3.3 percent of those who apply will get a holiday job, but that's better than last year, when only 3 percent were accepted.