According to a new employment survey, the percentage of companies who plan to hire new employees has slipped for the first time in the past year. The quarterly report by Manpower Inc., one of the nation’s largest employment agencies, shows that 22 percent of about 16,000 companies interviewed nationwide expect to hire more workers in the second quarter–a slight drop from the first quarter, after adjusting for seasonal factors. While only 9 percent anticipate job cuts next quarter, nearly two thirds of the companies surveyed nationwide say they plan to hold steady at current employment levels.
That’s not what job seekers want to hear, and there are a lot of them pounding the pavement. While more than a million Americans found work in January, 8.3 million remained jobless-a 5.7 percent unemployment rate, according to the Bureau of Labor Statistics. Almost 100,000 workers lost their jobs in the past three months, says John A. Challenger, chief executive officer of Challenger, Gray & Christmas, an international outplacement consulting firm.
“This is the time when this jobless recovery was supposed to be turning positive,” says Challenger. “But I am fairly pessimistic about where we are now from an employment standpoint. There seems to be far more areas of concern than there seem to be areas of things looking up.”
It’s not all gloom and doom for job seekers-especially if they look in the right places. The health-care sector–which includes hospitals, pharmaceutical and biotech companies and medical practices–is one of the fastest growing industries. Education (both secondary and higher), discount retail (Wal-Mart, IKEA, Target and similar retailers) and defense and security sectors are also expanding.
“The challenge now is that there are more people out in the marketplace this time because the downsizings were happening through the last spring, summer and fall, and now those people are on the streets and it’s much more difficult for those who seek jobs,” says Jeffrey A. Joerres, chief executive of Manpower. “The second quarter is weaker than what it would be in a normal recovery, so we’ll have to wait until the quarter after this to determine whether we’re headed north or south.”
In the meantime, those looking for work might literally want to head south–particularly if they live in the Northeast. The unemployment rate was 8.4 percent in New York City in December 2002 (the most recent data available)–2.7 percent higher than the national average. Statewide, the New York rate was 6.3 percent–similar to nearby states like Pennsylvania, which had a 6 percent unemployment rate. In the New York region, more companies plan to fire than hire. Only 10 percent of employers said they expected to add jobs next quarter, while 15 percent plan job cuts. The rest plan to keep staffing at current levels, according to the Manpower survey.
But nearly twice as many employers in and around Atlanta, the largest market in the southeast region, plan to add jobs than to cut them, with the most significant growth in the construction, wholesale and retail sale sectors. Eighteen percent of all employers in the area expect to make more hires in the second quarter while 10 percent foresee labor cutbacks. Atlanta also boasts a 4.7 percent unemployment rate–1 percentage point below the national rate. Overall, the southern region of the country showed the greatest improvement in hiring prospects from a year ago among all regions Manpower surveyed for their quarterly employment report. “You have a sense that we are at the end of this [recession],” says Don Johnston, vice president for Manpower’s southeast division. “I think most people here have a sense that things will be better.”
Nonetheless, Joerres says even companies who are in good financial shape remain anxious about hiring many new employees. “The geopolitical uncertainty is there and the uncertainty of whether the economy is really healthy,” he says. “These companies are running their operations really thin when it comes to people.”
Many employers have held off on making large capital investments, including new hires, because of concerns over possible war with Iraq and rising oil costs, which could drag the U.S. economy back down. They have reason to worry. On Wednesday, oil prices soared to nearly $38 a barrel, the highest level since Iraq invaded Kuwait a dozen years ago, on news of a drop in inventories and growing fears of a U.S. attack on Iraq in the near future.
“A lot of people’s hiring decisions are on hold till after the looming war situation is resolved,” says Henry Wilmore, chief U.S. economist at Barclays Capital. “I think that has less to do with how people see business than a desire to be very conservative about making commitments ahead of that kind of uncertainty.”
Still, Wilmore remains optimistic. “To me, it is impressive that we are even seeing modest improvement before the war; things are close to improvement but they’ve been retarded. There’s an argument that the worst thing of all is uncertainty.”
That could mean that once the Iraqi conflict is resolved, the number of job postings could soar. But there is also the question of how long weapons inspections–or a war–in Iraq could last. While Joerres says that hiring trends are better now than they were last year at this time, he notes that the recent dip is “a little more accentuated” than is typical and probably reflects the growing uncertainty over both the speed of the economic recovery and tensions with Iraq and the potential fallout from war. “I think we are out of what would be normal recovery and into uncharted waters,” he adds.
Job seekers, grab your lifejackets. It could be rough sailing for awhile.
