By Claudia Hirsch

NEW YORK, Jan 6 (MNI) - The slow thaw in U.S. permanent hiring activity continued in December, according to staffing executives.

Recruiters said employers are beginning to plug a few of the gaping holes in permanent staffing that their recessionary cost-cutting measures produced, but the process is uneven and probably won't kick into full gear before the second half of 2010. Clients are more comfortable bringing on contingent staff amid ongoing economic uncertainty, and orders for temporary, temp-to-hire and contract workers are ramping up. Hiring is most active in healthcare, from receptionists to practitioners, in information technology and accounting and finance, and for sales people in a variety of industries. Wages are mostly steady, staffing professionals said.

A recruiter with seven offices in the Los Angeles area said December brought a surprising uptick in permanent-job orders. "Perm growth last year was fairly non-existent, so to go into 2010 on an upswing is very positive for us," said Lee Fossey, L.A. metro regional director for staffing giant Manpower, headquartered in Milwaukee.

Fossey said placements are in medical coding, billing, collections, administrative support and low-level management. Elsewhere, he's also received orders for retail managers and, notably, for manufacturing managers.

His December gains are the result of clients' own businesses expanding again and the realization that they can no longer run as lean as they have for much of this year.

While he expects the December's mild perm-hiring uptrend to continue this year, he doesn't see it as the main ingredient in the labor market turnaround.

"It's going to be a temp-driven recovery," Fossey said, referring to a growing movement toward flexible staffing. "As companies get busy again, they're going to add in contingent headcount. It's going to be very specific. They'll be hiring key positions rather than every position."

Fossey said his temp and contract staffing business has been strong throughout 2009, led by healthcare, financial as well as media and entertainment industries. Holiday-heavy December figures fell a little from November, but were up over 2008, as were 10 of the remaining 11 months in 2009, he said. He'll close out the 2009 with growth in his total volume in the high single digits. He expects double-digit gains in 2010.

A staffing professional who oversees 130 offices stretching from Minnesota to Texas said she, too, has been surprised by the high level of staffing activity she saw at year-end.

"Customers are re-engaging," said Dina Simon, central zone vice president for Express Employment Professionals, a leading privately held staffing company headquartered in Oklahoma City, OK.

"We are over-the-top excited about the numbers that we've had week-over-week in November and December," she said. "Usually we're ramping down in December, but this year we were ramping up." Weekly figures have also been trending higher year-over-year since October, she said.

"We've seen an upsurge in our temp, temp-to-hire, contract and, in some of our markets, our professional business," Simon said, and added that engineering, accounting and finance, IT and sales are all seeing gains in permanent (also known as direct) hiring.

"Companies cut sales force to cut overhead," she said, describing just one portion of the employment bloodbath that was 2009. "They're realizing now that the only way to grow is to add to the sales force."

Simon said that despite the fourth-quarter turnaround, her zone's business total for 2009 will likely fall short of 2008 by about 20%.

A colleague of hers in the Southeast said temp hiring is on a relative roll, and perm and temp-to-hire activity is also improving, though it remains soft overall.

"We beat our December projections by about 15%, which is very surprising," said Don King, who owns four Atlanta-area franchises and also serves as the regional developer for Express, overseeing 20 Georgia offices.

"The conversations have definitely changed in the last quarter," he said. "Clients that have been laid down all year are increasing their projections and moving up their time frames for when they're going to come back."

Automotive suppliers and distribution centers are among the firms hiring temps, King said. Box and palette manufacturers, which he views as a key indicator for the broader economy, are getting busier, but they're still not running 24/7, as they did in better times.

He, too, said he's placing a lot of medical staff just now, from nurses and their assistants to billing clerks and receptionists. Recently, more of those assignments have converted into permanent slots, and the same is true in many fields, King said.

"We're definitely seeing more conversions now than six months ago in all areas, across the board," King said, but added that he doesn't see direct hiring coming back in force before the second half of the year.

"Contract-professional hiring is what's going to increase," he said, describing what many recruiting industry veterans see as a structural shift underway in the labor market.

King's offices ended 2009 down about 24% vs. 2008, but he's looking for a 20% increase this year.

A staffing professional who handles placements in the Northeast and in Florida said long-dormant small and mid-size clients revived in the fourth quarter.

"Things have definitely picked up -- surprisingly even on the direct-hire side -- but I don't think we're going into a boom of permanent hiring by any means," said Steve Pearson, chief operating officer of Contemporary Staffing Solutions, a Mt. Laurel, NJ-based firm with eight offices in the Garden State, Pennsylvania, Delaware and Jacksonville, Fla.

Pearson said his recent direct placements have been primarily in sales and IT. But he noted that 85% of his revenues derive from contingent staffing, which he expects will enjoy solid gains this year. His biggest clients tell him they'll be using more contingent labor this year than last because they're not yet ready to commit to permanent hires.

His billable hours in December rose about 8% from November and a chunkier 25% from an ugly December 2008. Pearson said 2009 was an up year for his company, due in large part to partnerships with several large financial firms that all had swelling temp-hiring needs. This year's growth, he said, will likely come from a wider variety of clients, particularly small and mid-size firms.

A personnel specialist in Southern Florida sounded a very cautious note, though his December revenues were solidly higher than in November and also up over 2008.

"We're starting to see some additional temp hiring, and I think there's a slight increase in confidence, but a lot of clients are waiting to see if this is a sustainable recovery," said Carl Goetz, owner of the Fort Lauderdale Express franchise. Severely stung by the still-unfolding housing crisis, the region's economy is especially vulnerable to a double-dip recession if foreclosures continue unabated, he said.

"We're expecting a mostly flat market the first half of this year, but companies should go back into the hiring mode in the second half."

Goetz's recent perm orders have been in the medical field, for occupational therapists and physicians, and for a manufacturing engineer. His sales staff reports renewed interest, if not orders, from prospective clients in bringing on temps and even core staff. But for the most part, he said, employers are still "afraid to hire anyone permanently right now."

A Houston-based recruiter in IT and oil-and-gas supply chain arenas said permanent-job orders waned in the second half after briefly bouncing higher in July.

"We are not actively going after perm placements, but we also didn't get as many of those orders in 2009 as we usually do," said Juuhi Ahuja, president and chief executive of Wise Men Consultants and 17th Floor, both servicing Texas. She said her 2009 perm revenues were about 20% of those of 2008. "I attribute a lot of it to online recruiting."

Contract IT staffing, however, has fared well for Ahuja, who booked a 16% gain last year vs. 2008. Energy, oil and gas and healthcare industries are most active, she said. Her total business, which includes booming demand for a suite of IT products and services, ratcheted higher throughout the fourth quarter and registered a 52% surge in 2009.

"Purses are opening up again," Ahuja said. "Most clients have a very positive outlook for 2010." Clients in academia, however, are more skeptical than in years past, possibly because of states' recession-crippled budgets, she said.

IT contract candidates have begun to demand chunky pay increases in the last two months. Ahuja said better availability of work has something to do with it, but so too has a flattening labor supply. She's finding it harder to bring in programmers and other talent from China and India, and to transfer work visas for such immigrants once in the U.S., due to the government's stringent documentation requirements.

** Market News International New York Bureau, phone 212-669-6430 **