U.S. temporary staffing -- historically one of the first areas to show evidence of a jobs recovery -- appears to have hit bottom, but questions remain how long it will stay there.

I think we're at the bottom here, said Roy Krause, head of Spherion Corp, one of the largest U.S. temporary staffing companies.

Krause noted improving demand for workers in the U.S. Midwest, which he said was partly attributable to the government cash-for-clunkers autos program. He also said he was encouraged by higher orders for workers with professional skills in finance and accounting.

Government data is likely to show an increase in temporary help payrolls by November, said Tig Gilliam, North American CEO for Adecco SA, the world's biggest staffing firm.

We're seeing more clients talking about how to bring capacity back into the workforce, Gilliam said. That will set us up for overall jobs growth in 2010.

About 7,000 temp jobs were lost in August, far below the pace earlier in the year. Overall, 216,000 jobs were lost outside the farm sector last month, bringing the total since the recession started to 6.9 million. The unemployment rate, at 9.7 percent, is the highest in 26 years.

Adecco -- the third-largest U.S. employer behind Wal-Mart and the postal system -- reports improving demand in recent weeks for temps in areas like automotive and mortgage banking. These reflect stimulus funds such as the cash-for-clunkers program and a homebuyer tax credit.

Gilliam estimated filling about 2,000 to 3,000 auto-related positions since GM and Chrysler emerged from bankruptcy.

Another area of strength is in engineering, science and technology staffing, helped by the staffing needs of the healthcare industry. Healthcare was one of few industries to increase employment in August, the government said.

But Gilliam cautioned: There's nothing here to say the market's turned and we're now climbing out.

'AT A LOW POINT'

Jeff Joerres, CEO of Manpower Inc, noted temporary job losses were now running at a similar pace to those in the wider labor market, whereas in the recession's earlier stages temp job declines were disproportionately worse.

That in and of itself says we're at a low point, Joerres said.

Staffing executives agreed the U.S. unemployment rate was likely to top 10 percent in coming months, even if job losses abate, because several million discouraged workers are not currently counted. Once such workers begin to feel hopeful about finding a job, they will swell the ranks of the unemployed until that new job materializes.

Wall Street analysts who follow the temp staffing sector have said growth is likely several quarters away.

But they have seen evidence of a bottom in measures like weekly working hours and the percentage of temps in the wider labor force. At 1.32 percent, that metric was down only marginally last month, and a bottoming of this number typically correlates with the end of recession.

The worst appears to be over, BMO Capital Markets analyst Silber said in a research note on Friday.

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