Hiring
Weak Labor Market Expected Through Summer
Employers plan to continue their frugal hiring practices in the coming months, according to two just-released employment trends reports.
The Conference Board's new monthly Employment Trends Index (ETI) showed a decline in May, continuing a drop that began in July 2007 and suggesting more softening to come in the labor market. The index, launched June 9, 2008, was at 113.7 in May compared with 114.3 in April.
In addition, U.S. employers recently surveyed by Manpower Inc. projected a slight decline in hiring for the third quarter of 2008, according to the seasonally adjusted results of the latest quarterly Manpower Employment Outlook Survey.
The statistics from The Conference Board and Manpower echo findings in the Society for Human Resource Management (SHRM)/Rutgers Leading Indicators of National Employment (LINE) report released in late May 2008, which found that employment expectations had dropped sharply in the services and manufacturing sectors for June and that the difficulty of recruiting had also declined significantly. The report can be found at www.shrm.org/LINE.
“We forecast further softening in the labor market, a moderate rise in unemployment, and weaker wage growth over the next several quarters,” said Gad Levanon, senior economist at The Conference Board. “Employers will find it easier to recruit and hire, and [they] will be looking at slower growth in compensation costs. Workers will find it harder to get a job, a raise or a bonus— all of which will further rein in consumer spending.”
The ETI aggregates eight labor market indicators:
- Percentage of respondents who say they find "Jobs Hard to Get" (The Conference Board Consumer Confidence Survey).
- Initial claims for unemployment insurance (U.S. Department of Labor).
- Percentage of firms with one or more jobs open (National Federation of Independent Business).
- Number of employees hired by the temporary-help industry (U.S. Bureau of Labor Statistics (BLS)).
- Part-time workers for economic reasons (BLS).
- Job openings (BLS).
- Industrial production (Federal Reserve).
- Real manufacturing and trade sales (U.S. Bureau of Economic Analysis).
“The Employment Trends Index peaked in summer 2007, leading the job losses that began in January 2008, and we don't see signs of a turnaround yet,” Levanon added. “Over the last year, the index—like each of its eight components—has fallen at rates consistent with those we saw in previous periods of employment decline, such as 2001. That said, we don't anticipate job losses on the scale of those in that last contraction, in good part because employers have kept their payrolls leaner.”
Few Massive Layoffs Seen
The outlook was no rosier in the Manpower survey.
“While overall softness continues in the third quarter, employers are generally not reacting with large-scale payroll reductions,” said Jeffrey A. Joerres, chairman and CEO of Manpower Inc. “The gradual slowdown suggests that employers have become sophisticated at anticipating their hiring needs.”
Of the 14,000 U.S. employers surveyed, 26 percent expect to increase their workforces during the July-September period, while 10 percent expect to scale back their payrolls for a net employment outlook of 16 percent, or a seasonally adjusted 12 percent. Fifty-eight percent expect no change in the hiring pace, and 6 percent are undecided about their hiring plans.
Seasonally adjusted survey data indicates that hiring in five of the 10 industry sectors surveyed will decrease slightly during the upcoming quarter compared to last quarter, making it the weakest employment outlook since the fourth quarter of 2003.
Employers in the nondurable goods manufacturing, transportation/public utilities, wholesale/retail trade, finance/insurance/real estate and education sectors all point toward somewhat more guarded hiring activity than last quarter.
Construction, durable goods manufacturing, services and public administration staff levels are expected to remain stable compared to the previous quarter.
Mining is the only sector indicating an increase in hiring for the upcoming quarter.
“Hiring looks to be a bit cooler this summer,” said Jonas Prising, president of Manpower North America. “However, select industries are showing stability that may provide opportunities for job seekers who have the skills that employers need.”
Employers in the Northeast and South anticipate a slight downturn in hiring heading into the third quarter of 2008. In the Midwest, a positive net employment outlook is expected, while employers in the West are expressing a moderate decrease in hiring.
Global Hiring: Steady, but Slow
Employers in other major labor markets around the world are less optimistic about hiring in the third quarter, too, according to the Manpower Employment Outlook Survey of global hiring trends. The quarterly survey results indicate a relatively stable outlook, mainly in Europe, with about half of the countries included in the survey program expecting to reduce hiring and the other half planning to continue hiring at a steady pace or increasing headcount in the third quarter.
Of the seven countries surveyed in the Americas, employers in Peru, Costa Rica and Argentina are most optimistic about adding staff in the next three months, while those in Canada are the least optimistic. Mexican employers continue to be upbeat about hiring.
“The weakness seen north of the border has not appeared to suppress Mexican employers' appetite for workers,” said Joerres. “For the third consecutive quarter employers in the transport and communication sector have the strongest hiring plans with those in the mining and extraction sector reporting the strongest job prospects in six years.”
As was the case in the second quarter, across the 17 countries surveyed in the Europe, Middle East and Africa (EMEA) region, employers in Poland, Romania, Greece, South Africa and Norway are most optimistic about hiring in the quarter ahead. In contrast, the hiring forecasts from Spanish, Italian and Irish employers are the least optimistic in the region and globally.
In the Asia Pacific region, the survey data continues to show varying degrees of positive hiring expectations. Employer hiring plans have softened from both the second quarter and one year ago in five of eight countries and territories surveyed. The strongest employer hiring plans were again reported in India and Singapore, while employers in China reported the weakest hiring outlook in the region for the fourth consecutive quarter.
“It should be no surprise that the global labor market is decidedly more cautious in light of the current economic climate, with employers in most of the countries we survey planning to slow the pace of hiring from this time last year,” said Joerres. Employers in all of the G7 countries are expecting to hire at a slower pace from July through September than they were a year ago, which is concerning; however, the quarterly trend shows that these labor markets remain healthy with five of the seven countries holding steady or showing improvement.
“Of the G7 countries, only those employers in the U.S. and Japan are planning to reduce hiring between the second and third quarter of this year,” Joerres added. “France, Germany, Italy and the U.K. are all planning to maintain a steady hiring pace from now through September, while Canadian employers indicate a slight improvement. In the important emerging markets of China and India, employers are planning to increase hiring as they enter the third quarter.”
Article by Theresa Minton-Eversole - manager of SHRM Online's Staffing Management Focus Areafrom http://www.shrm.org/ema/news_published/CMS_025822.asp#P-4_0