Consumer Spending Slows, Hiring Outlook Precarious
Cautious consumers may hurt the tenuous recovery, as household purchases grew at the slowest pace in a year, according to Commerce Department data. “Hiring going forward will, in large part, be defined by the demand of consumers,” said Challenger. “If companies aren’t growing quickly, they don’t need the workers, even if they have the cash to hire. Employers are still incredibly uneasy about the economy and don’t want to take any risks.” The biggest hiring announcements have come from the automotive sector, which through the first half of 2012 has announced over 12,000 new jobs in the US, according to Challenger. Other industries that have announced hiring plans include industrial manufacturing with over 7,000 through June, and the financial sector with just under 7,000. “The automotive industry is beginning to make a comeback as makers introduce new technologies that make cars more efficient and desirable. This increase in manufacturing trickles down to suppliers and retailers, as well,” said Challenger. What other industries may see a boom in hiring? What factors contribute to a positive hiring trend? How might the jobless seek out industries ripe for growth?
A report out today from the Bureau of Economic Analysis shows that Americans’ incomes increased “sharply” in January, rising 1.0%. While that is the biggest one-month increase since May 2009, the few extra dollars in workers’ paychecks is unlikely to ignite a surge in consumer spending or new hiring. In fact, any extra money in Americans’ wallets will probably end up in their gas tanks, as instability in several oil-producing countries continues to push up the price of a gallon of gasoline. According to John Challenger, chief executive officer of global outplacement firm Challenger, Gray & Christmas, the spike in fuel costs for both consumers and businesses could present the biggest obstacle yet to job growth and could prove to be a significant setback for the recovery. “Companies will be reluctant to pass along their higher fuel costs to consumers. So, the more companies are required to spend on fuel, the less they have to spend on expansion and hiring,” he noted. Will higher fuel costs lead to a double-dip recession? Will employers take any steps to help their workers cope with higher fuel costs, such as increased use of telecommuting or transportation allowances? Will the spike on fuel costs accelerate efforts to develop alternative fuel sources in order to decrease the country’s dependence on foreign oil?
NEARLY 650,000 HOLIDAY WORKERS HIRED
Retail employment experienced a net gain of 646,300 jobs between October and December, according to an analysis of employment data released today by the Bureau of Labor Statistics. That is a 28.9 percent improvement over 2009, when seasonal hiring led to 501,400 net new jobs.
The analysis conducted by global outplacement consultancy Challenger, Gray & Christmas, Inc. found that while November hiring was about the same as a year earlier, October and December hiring was the heaviest it’s been in several years. Last month, retail employment grew by 181,900 positions, which is the largest December gain since 2005. October’s increase of 146,800 retail jobs was the largest for that month since 2006.
Note: Today’s report from the Bureau of Labor Statistics shows that retail employment increased by a seasonally-adjusted 12,000 jobs. For the purposes of this report, Challenger refers to the non-seasonally adjusted data provided by the BLS.
Full Report (PDF) http://www.challengergray.com/press/PressRelease.aspx?PressUid=155
Is the recession helping Men’s Warehouse sell more suits? The Houston-based tuxedo and suit retailer reported better-than-expected second-quarter earnings, thanks in part to increased sales. While there was no indication from the company as the reason behind the increased sales, workplace authority John Challenger believes it could be a surge in suit-buying by out-of-work Americans trying to look their best for job interviews. “After years of many workplaces going casual, a trend that hurt suit retailers, job seekers wanting to dress up for interviews don’t have anything in their closet that fits or is in fashion. So, they are heading out to restock their suit collections. Places like Men’s Warehouse that offer good value are going to do better than high-end retailers selling $1,000 suits,” noted Challenger. With the job market so competitive, is it important to dress up for interviews? Are dress codes in the office returning to a more formal or traditional business attire because of the economy?
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A look at the monthly employment figures from the government can be somewhat disheartening for the millions of job seekers hoping to land a position in the slowly recovering economy. After all, total non-farm payrolls suffered a net loss of 54,000 jobs in August while private payrolls grew by only 67,000, well short of the growth needed to make a dent in unemployment. If you are in an industry like construction, manufacturing or retail, the picture looks even worse. Construction added 19,000 jobs after two months of losses totaling 13,000 jobs. Manufacturing payrolls fell by 27,000 last month while retailers’ payrolls shrank by nearly 5,000. Looking at those numbers, one might simply assume that there are no jobs available in these industries. However, that is not the case. While it is true that employers in these areas lost more employees than they gained, there was still plenty of hiring. The Bureau of Labor Statistics latest Job Openings and Labor Turnover survey provides a clearer picture of hiring activity, albeit a month behind the other employment data. In July, for example, the report shows that construction companies hired 351,000 new people, up from 289,000 a month earlier. Additionally, there were another 76,000 job openings that were left unfilled at the end of the month. Manufacturers hired 294,000 in July and had 228,000 more openings. Retailers hired 603,000 and still had nearly 300,000 openings to fill heading into August. So, yes, payrolls are still showing net losses, but these numbers show that hiring is occurring. It is critical that job seekers not give up or even let up on their searches due to the assumption that no jobs are available. What can job seekers do to improve their chances of being one of the people hired? Are all of the job openings reported by employers advertised in the help wanted sections or online? If not, what can job seekers do to uncover this hidden job market?
Late yesterday, the Senate passed legislation extending unemployment benefits for Americans whose standard 26-weeks of assistance offered by most states expired. The measure now moves to the House, where it is expected to gain quick approval and be sent to the President, who has vowed to sign it. The bill impacts about 2.5 million Americans whose benefits ran out in June. It will not provide further extensions for the more than 1.5 million Americans who are approaching their 99th and final week of emergency assistance. Do the severity of the recession and slow job creation in the early stages of the recovery warrant an extension of benefits beyond the maximum 99 weeks? Or, do additional extensions provide a disincentive for aggressive job searching, as some have suggested? What can 99ers do to turn their job-search fortunes around and overcome the obstacle of long-term joblessness?
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After a painful economic recession, Germany has seemingly bounced back as consumers begin buying German cars, so much so that BMW has reported giving bonuses to their dedicated employees, according to an Associated Press article. Moreover, since German employers reduced hours instead of staff, workers kept their jobs, allowing them spending money to pump back into the economy. Meanwhile, the labor market at home continues to suffer from high unemployment and long-term joblessness. However, manufacturing and consumer prices continue to improve over a year ago. What can we expect in the second half of 2010? Have tactics such as the ones employed in Germany been employed in the US? What other policies could improve the economy long-term?
SINKING CONFIDENCE WILL FURTHER DAMAGE RETAILERS
With back-to-school sales well underway, retailers were undoubtedly disheartened to see that consumer confidence declined for the second consecutive month, according to the most recent report. The back-to-school period is crucial to retailers, second only to the holiday season in terms of sales volume. Entering this year’s back-to-school/college season, the National Retail Federation was already projecting a 7.6 percent drop in sales. Certainly, the apparent lack of confidence could threaten sales even more. Parents and students will limit their purchases to only what is absolutely necessary, and they will spend the least amount possible on those items. What impact will lower back-to-school sales have on retailers? Will we see more job cuts from struggling retailers in the wake of a dire back-to-school period? What does this foretell, if anything, for the all-important holiday selling season?
RECOVERY COULD BRING EXODUS OF UNHAPPY WORKERS
While monthly job-cut announcements have fallen significantly since the beginning of the year, there have been very few signs of turnaround in job creation. Most experts agree that the unemployment rate will continue to rise in the coming months, exceeding 10 percent before finally reversing course. However, it can be assured that the first inkling of a job market turnaround will probably bring a rapid surge in turnover at organizations throughout the country. Many employers are already expecting as much, according to a new survey by consultancy firm Deloitte, which found that nearly two-thirds of those managers were highly or very highly concerned about losing high-potential talent in the year after the recession ended. In addition to layoffs, many employers have decreased workers’ hours, instituted pay cuts, forced employees to take unpaid vacations and halted matching 401(k) contributions. While some of these measures have saved jobs, they undoubtedly left many workers disgruntled, frustrated and ready to move on as soon as the market improves. Which industries could see the highest turnover as the job market recovers? When is the best time for workers to stick their toe in the job market?