Thursday, June 9, 2011

Employment Market Commentary

This last May we saw a decline in search work, reading this article from seemed to hit the nail on the head. We are optimistic that the Bay Area Market will continue to grow slowly and that new employment will take place but we will not see a big upswing anytime soon. The numbers in this report are not specific to the Bay Area which is doing better than most of the US.

CFO Optimism Is Down, and So Is Hiring
Finance chiefs say the economy will continue to grow, but slowly, according to the latest Duke/CFO Global Business Outlook Survey.
Kate O'Sullivan - US
June 8, 2011

Like so many economic indicators lately, finance chiefs' expectations have taken a turn for the worse, as the unease that has dogged the recovery since it began has deepened in recent months. From the ongoing European debt crisis to the disaster in Japan to rising oil prices and bouts of severe weather in the United States, a host of factors are dampening CFOs' spirits. Add to that poor employment and housing numbers, and it's little wonder finance executives are getting skittish.

Just 27% of U.S. CFOs say they are more optimistic about the economy this quarter than they were last quarter, while 36% say they are less optimistic, according to the Duke University/CFO Magazine Global Business Outlook Survey released today. When finance chiefs rate their optimism on a scale from 1 to 100, the results are less dramatic, though still down — 57 out of 100, down from 61 last quarter and roughly even with a year ago.

"Three to six months ago, I definitely had a more positive outlook on the economy," says Greg Gould, finance chief at SeraCare Life Sciences, a small publicly traded biotech company. "Now I'm a bit more worried that there could be some kind of a double-dip [recession]." SeraCare, which counts the National Institutes of Health as a customer, benefited from stimulus spending included in the American Reinvestment and Recovery Act. Now, says Gould, that impact appears to be fading.

Finance execs do plan to spend money in the coming 12 months, however. Capital expenditures, research and development spending, and advertising and marketing budgets will all grow, but by smaller amounts than CFOs reported last quarter. Tech outlays, however, are expected to increase by 6% on average, up from 5.5% three months ago.

Full-time domestic hiring will continue to be anemic, with finance chiefs saying they will increase staffs by less than 1% in the next 12 months. That number, also down from last quarter, means that unemployment will likely linger at its current rate of just over 9%. Twenty-one percent of CFOs say they are actively hiring, while another 16% say they are short-staffed but lack the resources to hire. Nine percent say they are short-staffed and would like to hire but are having trouble finding the types of employees they need.

For those workers who are currently employed, the outlook is brightening somewhat. A majority of companies that reduced employees' hours during the recession have restored those hours or plan to restore them in the next 12 months, and nearly half plan to return training and development efforts to their prerecession levels in that time. CFOs say wages will rise by 3% on average.

Still, many are holding off on hiring as they continue to wait for the economy to improve. "People are hesitant to make a long-term bet," says Gould. "I think with housing continuing to be unstable and with the continued high unemployment rate, people are going to continue to be nervous."

If you have questions about the Bay Area maket please feel free to reach me.

Bryon McDougall