This is a partial transcript from Your World with Neil Cavuto, August 22, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Boeing (BA) laid off 1,400 workers on Friday, Schering-Plough (SGP) close to that, as the drip-drip of cuts-cuts continues.

But, in case you think that everyone’s job is in danger, my next guest says think again. Things are actually getting better. And he should know. He’s the bible on this stuff.

I’m talking about John Challenger of Challenger, Gray & Christmas. They’re the folks who keep tabs on the nation’s payroll.

And, John, if I’m to believe your data, things could be looking up. What do you mean?

JOHN CHALLENGER, CEO, CHALLENGER, GRAY & CHRISTMAS: They are, Neil. We’ve seen now three consecutive months of downsizing under 100,000 a month. That’s the lowest and the best we’ve seen, really for 30 months back before this recession and this slowdown began.

CAVUTO: So what does that mean going forward then?

CHALLENGER: Well, there’s certainly a real possibility the economy (search) is starting to recover. Those big productivity numbers, 5.7-percent gain that we just saw, may very well be kind of that explosive quality.

Companies stayed with their workers. They are not creating jobs yet, but they use them, they had to use them. That created big gains there, but they can only do that for so long.

CAVUTO: So where is all of this going? I mean if we are going to be looking at a jobs recovery -- and usually jobs are a lagging indicator -- this would seem true to form here. The economic numbers begin to look good, jobs follow suit.

CHALLENGER: That is right. It’s been over 20 months now of job creation that’s just been negative. We haven’t seen any turnaround. In fact, the last five months have been poor, but the economy is beginning to tick.

We have a number of sectors -- health care, defense, and security, for example -- that are growing, beginning to create jobs. Maybe this whole power sector, if we rebuild the grid, could be one of the engines of real growth.

CAVUTO: It’s one thing to slowly drop off getting rid of people, but it takes another act to start hiring people. When are we going to see that?

CHALLENGER: Business owners have to be convinced that this start-and- stop economy that we saw over the last two years -- they’d see their orders start go up a little bit, but then, boom, it would hit -- again, the slowdown -- and they’d have to pull back.

They need to be convinced that the recovery is for real, that it’s going to be sustainable. Once that happens -- they start with temporary workers to make sure that they can get the work out, but, once it’s for real and sustainable, then they’ll start to create jobs.

CAVUTO: We have noticed them hiring those temporary workers that you alluded to there, and then that hiring was actually running near record levels. Is that a good precursor to then hiring permanent workers?

CHALLENGER: It sure is. We’ve now seen three consecutive months after a year in the doldrums of upward growth in temporary jobs. That means there’s more work out there, and business owners have to find a way to get that work done.

Often, those temporary jobs are extended interviews. Companies now can look at those people, see how they fit in, and then if their businesses are really going, they can convert those people into full-timers.

CAVUTO: All right. Six-point-two-percent unemployment now, thereabouts. Where do you see it going?

CHALLENGER: Well, let’s hope it’s going to go down. Right now, that number’s really being jockeyed about by the number of people coming in or leaving the workforce. In June, we saw 900,000 new people, maybe a bit optimistic, come in looking for work that hadn’t been, and the numbers shot up to 6.4.

CAVUTO: All right.

CHALLENGER: Then it went back down to 6.2 percent because a half a million left, and so that’s one of the keys right now, is how many people are going to be in the workplace.

CAVUTO: We’ll be watching.

John Challenger, Chicago.

Thank you, sir. Appreciate it.

CHALLENGER: Thanks, Neil.

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