The economic surprise of the last six months has been the strength of the rebound in global industrial activity. The surprise of the next six months could be the speed of the turnaround in labour markets.

A fundamental reason for optimism is the impressive recovery in company finances, which should encourage more expansionary behaviour. In the US, the corporate financial balance – the difference between retained earnings and capital spending – has moved from a deficit of 2.1% of GDP in the first quarter of last year to a surplus of 1.1% by this year's second quarter. Excluding the third and fourth quarters of 2005, which were distorted by a one-off repatriation of foreign profits to take advantage of temporary tax incentives, this is the highest since the fourth quarter of 1960. The financial balance is a leading indicator of employment – see first chart. The equivalent UK balance has also moved into surplus.

Trends in temporary employment often provide early warning of changes in labour demand. US "temporary help" jobs fell by just 2,000 in September versus a