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Analysts See Positive Signs in Job Market

Posted by Predovich & Company

Analysts said there are indications that the battered job market is starting to show signs of life. An executive search industry group leader said he is cautiously optimistic about the future and a recent study found that in the next 12 months, more than half of the employers polled plan to hire full-time employees.

As Wall Street looks for signs of an economic recovery, the unemployed look for the one that reads “Now Hiring.” Analysts said that after a brutal series of layoffs there are some indicators that the job market is coming back to life. The Labor Department said the number of U.S. workers filing new claims for jobless benefits fell by 10,000 to 570,000 in week ending August 22, 2009. However, the White House also said President Obama expects unemployment to hit 10% sometime this year.

Economists are generally feeling more positive about the future. The National Association for Business Economics’ Economic Policy Survey found that nearly 70% of business economists believe that monetary policy is “about right,” which is up from 63% in March and 56% a year ago. However, the respondents were split on whether policy should remain on hold or become more restrictive over the next six months. The semiannual survey, a consensus of a panel of 266 NABE members, found that 56% of the respondents expect interest rates to remain where they are, while 44% expect an increase. Only 45% believe the current proposals for health care reform would bring a net improvement in the access to, and quality and cost of, health-care services. A majority of the respondents believe that many of the Obama Administration’s financial regulatory reforms are likely to result in improved financial stability. However, few respondents believe the creation of a Consumer Financial Protection Agency will lead to improved financial stability.

Thirty-two percent of hiring managers plan to hire staff-level professionals, while 28% will be looking to hire entry level workers. Sixty-one percent of hiring managers said their companies are willing to negotiate higher compensation for qualified candidates. However, the study found that employers have not accelerated the hiring process. The average time to fill open positions, depending on the job level, is 4.5 to 14.4 weeks, unchanged from a year ago. “Companies are using the time to make sure they’re hiring the best talent out there,” said Richard Deosingh, regional manager of Robert Half International in New York. Firms are also temporary workers so there is no urgent need to fill certain jobs, he said.

Nearly half the employees interviewed said that after the economy improves, the most effective way to keep then on board will be through pay increases. Deosingh said that employers will need to “re-recruit” their existing workers. The executive level positions are also showing signs of so-called “green shoots,” according to the Association of Executive Search Consultants.

The group said the decline in executive search activity ended in the second quarter, rising 1% over the first quarter of 2009. Senior executive searches in the technology and financial searches, which both slipped in the first quarter, rose 4% in the second quarter. “I think this shows that organizations are feeling more optimistic,” said Peter Felix, the association’s president. “Top management is getting off its hands and taking some decisions. People are essentially gearing up from the rebound.”

Felix said that top management “went into a kind of freeze or shock” by the severity of the recession and could not make any decisions, “except laying off lots of people, of course.” Felix said that the executive search industry suffered a 40% drop business in the first six months of 2009 compared with 2008. “That’s horrendous,” he said, but noted that the previous year had been the all time peak.

Felix said that until October 2008, the executive search industry “had the most amazing 5 years of growth.” He said was cautiously optimistic about the economy and noted that “a lot of clients who put things on hold are beginning to talk about them again.” “Organization can’t stop critical hiring forever,” he said, “unless we’re all going to hell in a handbasket.”

John Challenger, CEO of the Chicago-based consultancy Challenger, Gray said the period where downsizing was exploding has pulled back. “We haven’t seen a really extraordinary turnaround in job creation,” he said. “But it has turned around. Candidates are getting more interviews and more offers are being extended.” Challenger said some areas of growth include healthcare, energy, and infrastructure projects sparked by government stimulus money. In addition, he said the economy will become more global. “Part of the U.S. job growth will depend on our ability to tap into the growing middle class consumer market around the world,” he said. “Jobs springing from U.S. companies who able to get global business are going to be a real driving force.”

Source: RIA Checkpoint WG&L Accounting & Compliance Alert 9/1/09

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