Economic Fears Keep Staff Levels Lean
By Dennis McCafferty | Posted 2013-07-02 |
While signs appear to point toward a slow, steady economic recovery, don't count on strongployers to step up their hiring efforts anytime soon. A recent survey from Challenger, Gray and Christmas reveals that a significant share of companies don't plan to bring staffing levels up to where they were before the most recent recession. Even organizations that are increasing headcount are generally not bringing back workers who were laid off in recent years, findings reveal. Many managers aren't convinced that the economy is strong enough to justify major staff expansions, and, as reported previously, there's the lingering problstrong of finding people with the right skills for available positions. "A 'jobless recovery' may be the new post-recession norm," says CEO John Challenger, "as strongployers rebuild their workforces from scratch, take more time to vet candidates and find ways to operate with fewer workers. All of these factors slow the rebuilding process, which has led many to perceive this jobs recovery as being especially sluggish. This perception is understandable, considering that we are now four years out from the official end of the recession, and employment is still more than two million jobs below the pre-recession peak."
From Is the Recovery Failing? - CEA, by Shawn G. DuBravac, Chief Economist, June 24, 2013
The labor market remains mired and unstable. The official unemployment rate is expected to improve only slightly this year — from 7.8 percent at the close of 2012, to 7.6 percent by the end of 2013. The Bureau of Labor Statistics estimates the U.S. added 168,000 jobs each month of the first quarter of 2013 — less than the 209,000 averaged each month during the fourth quarter of 2012, and below the average 186,000 jobs added each month during all of 2012. While an average of 168,000 new jobs a month is slightly better than the middle quarters of 2012, job gains for 2013 don't paint the picture of a recovery. The unemployment rate has drifted slightly lower during 2013, but this statistical phenomenon has primarily been due to individuals leaving the labor force. Labor force participation in the U.S. was 63.3 percent at the close of the first quarter—the lowest level in almost 34 years. It is also important to remember that as the labor base grows, so too must the job gains. Today's job gains aren't as economically significant as gains in prior years when the labor force was smaller. With a larger labor force, the ratio of new jobs relative to the size of the labor market must increase. More new jobs need to be created to support the expanded labor market. The U.S. economy needs to create nearly 275,000 new jobs per month to match the ratio of new jobs to the underlying labor force that existed during historical periods of prolonged expansion. ..... < snip > We are now four years into the economic recovery. On several fronts, economic factors are showing notable improvement. ..... < snip > But on many fronts, the economy continues to lack the elements of a recovery. This is evident in the labor market.
From Business confidence back to financial crisis lows - CNBC, by Kiran Moodley, 2013 July 14
The report, which surveys around 11,000 global manufacturers and service providers, found that business optimism darkened in the first half of this year, dropping back to levels not seen in four years. The net balance of companies predicting rising business activity over the next twelve months fell to 30 percent in June, a low reached only twice before: in late 2009, and October 2012. "The global economy is clearly in a soft-patch again, largely reflecting darker outlooks in the U.S. and China," said Chris Williamson, chief economist at Markit. "It calls into question the ability of the economy to continue generating jobs at anything like the pace seen in recent months," Williamson said. "Any thoughts of an imminent tapering of the Fed's stimulus are looking premature on this basis." ..... < snip > Worldwide business confidence has fallen back to its financial crisis lows, with sharp declines in optimism in both the U.S. and China, according to an economic sentiment survey by Markit.
From June Data Is a Star-Spangled Disappointment - Barrons, by Gene Epstein, 2013 July 06
Even the upbeat jobs report wasn't without dampeners. The jobless rate held steady at 7.6%, unimproved since March. The number of involuntary part-timers — those working part-time but seeking full-time jobs — rose by nearly a third of a million in June, causing a jump in the broadest measure of the "augmented" unemployment rate (U-6) to a four-month high of 14.3%. The recent gains in nonfarm payrolls also look less impressive when viewed more appropriately in percentage, rather than absolute, terms. Over the past six months, private-sector jobs have risen by just 1.1%, a bit lower than the six-month pace of 1.2% in April. Both rates of increase are slow, compared with those in previous expansions. ..... < snip > ..... [the manufacturing index ... June's reading of 50.9]. The last time the manufacturing index hit 60 was in June 2004, when year-over-year GDP growth ran 3.9%. As of second quarter 2013, year-over-year growth is likely to run less than 2%. ..... < snip > < snip > ..... Confirming that downbeat expectation, the ISM's index of activity in the services sector fell 1.5 points in June, to 52.2, also signaling modest growth. In the second quarter, the post-great-recession expansion completed its fourth year without ever showing four-quarter growth as high as 3% — a fairly routine number in previous expansions.