View From a Height
Commentary from the Mile High City
Wednesday, September 15, 2004

Hiring Outlook 

One of the largest placement companies, Manpower, Inc., conducts a quarterly survey of hiring managers. Like the ISM supply managers survey, they use simple +/0/- questionnaire: is your company planning on hiring, laying off, or neither, during the coming quarter?

The news on this front continues to be good (sorry, Senator Kerry), with a seasonally adjusted net of +20. You get this number by subtracting the % of companies firing from the % of companies hiring. Most companies usually say they're doing no net hiring or firing, even in good or bad times, so the number represents a measure of the net new jobs expected to come on the market. As with all predictive surveys, your mileage may vary.

The +20 number is quite good, higher than every quarter from 1989 to 1997, although not as high as the go-go late 90s.

What's with this "seasonally-adjusted" stuff? Some industries are very seasonal, such as retailing and construction. (Except here in Colorado, where we enjoy 300 annual days of sunshine.) People in these industries, know this and plan accordingly. Just because a homebuilding company is slowing their February construction doesn't mean that business is bad. It just means the ground's too hard to dig. So you adjust for that, and compare year-to-year, rather than quarter-to-quarter.

Colorado's situation is slightly better than the rest of the country's. We're starting with a lower unemployment rate, and expect to hire at a slightly higher rate.

These numbers almost certainly come too late to affect the election. People's impressions of the economy are probably already fixed. They could affect squishy numbers like consumer confidence, if anyone were paying attention.

They are, however, evidence of a strenthening recovery. Businesses now tend to think of employees as investments, rather than labor as a commodity. This notion tends to stretch out the hiring cycle, implying as it does a longer-term commitment to employees, rather than just a pension deposit and a paycheck. For what it's worth, and keep in mind that you're not paying for this blog, I would expect over time to see closer correlations between capital expenditures and hiring.

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