Unemployment: Is Hiring Around the Corner?

For the week ended October 3, Weekly Jobless Claims measured 521,000, comparing favorably against the previous week's revised figure of 554,000. The periodic tally of new unemployment benefits filers reached its lowest flow rate since January. The count also proved better than the economists' consensus forecast of 540,000, based on Bloomberg's survey. As a result of the favorable figure, the four-week moving average also improved by 9,000, to 539,750.

Last week, we saw the federal government's monthly count of unemployment climb a tenth of a percentage point higher to 9.8% for September. This week's Department of Labor data showed the advance seasonally adjusted insured unemployment rate improved a tenth of a percent to 4.5% for the period ended September 26.

Be careful though, this by no means suggests unemployment has peaked. Unemployment benefits last through a specified period before expiring, leaving the folks who lost their jobs at the start of the recession high and dry... and not accounted for in this report. Still, the data certainly offers reason for hope, especially when considering that the "high and dry" numbers are being controlled via legislated extensions of unemployment benefits.

The government reports that extended benefits were available in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia and Wisconsin during the week ending Sept. 19.

State Leaders

The highest insured unemployment rates in the week ending Sept. 19 were in Puerto Rico (6.1%), Oregon (5.3%), Nevada (5.2%), Pennsylvania (5.0%), California (4.9%), Michigan (4.8%), Wisconsin (4.7%), Arkansas (4.6%), North Carolina (4.6%) and South Carolina (4.5%).

The largest increases in initial claims for the week ending Sept. 26 were in California (+4,467), Ohio (+3,421), Illinois (+1,815), Missouri (+1,049) and Tennessee (+1,048), while the largest decreases were in New York (-2,253), North Carolina (-1,609), South Carolina (-1,159), Arkansas (-818), and Florida
(-734).

Robert Half International Survey

Employment services firm, Robert Half International (RHI), recently surveyed employers and found that hiring new employees is their top priority once the economy bounces back. Of course, RHI has good reason to hope for such a turn about, since its own financial health depends on it. Still, 31% of those asked where they would invest new capital once the economic recovery took hold, responded they would look to hiring new staff.

Layoffs typically are late in coming, as employers bear costs related training, but also because managers are often in denial about economic decline until higher level budget pressures push them to act. Considering the depth of this latest and greatest recession, we think there's good chance employers overshot in their job cutting, and will look to hire swiftly and en masse when recovery takes hold. Robert Half, Korn/Ferry (KFY), Manpower Inc. (MAN) and Monster Worldwide (MWW) sure hope so. The shares of the above mentioned firms are up between 1% and 7% today on the good news.

Disclosure: No Positions

Comments

[market ace:]

"we think there's good chance employers overshot in their job cutting, and will look to hire swiftly and en masse when recovery takes hold".

I think some employers did cut massive amounts of un-needed inefficient labor while they had the chance, but to think they will quickly reverse course and hire back massive amounts of people may be just a dream. Others have done everything possible to keep as many people working as possible and will have no need to hire in the future.

I wish you were right, but the first problem is there will be no sustained recovery for a long time, many jobs lost today are never coming back and a country that has over consumed for too many years will have to under consume for many years.

The only job growth projected for the next several years is in healthvare, education and gov't so you may wait a long time for employers to ever jump into hiring again in other industries.

The gov't is also doing everything wrong. They are stifiling the allocation of much needed capital into gov't debt, killing small business with excess regulation and more costly benefits (so any increased labor demand will be filled with overtime rather than new employees). and driving even more large US businesses off shore. So where will new jobs come from. Even creating 15 million jobs in the next 5 years will just bring us back to even before the recession hit and that may be impossible.

Oct 08 05:05 PM

[conceptwizard:]

Try asking a small business owner whose bank is strangling him by cutting credit lines, while his inventory is dwindling, if he about to rehire in mass numbers.

The banks are crippling American small business and the consumer and the Obama Admin and Congress are letting it happen. Their answer is to use rebates and free cars.

We already lent the banks the money, with no stipulation for them to lend it back out.

Oct 08 07:51 PM

[TruthMaker:]

The MBA culture just doesn't get it. The primary lesson learned by corporations during the dot.com bust is that they can save craploads of cash by keeping payroll as low as possible. Companies, especially public companies don't care about the quality of their products or customer satisfaction. The only customers they are trying to please are their major shareholders. Everybody else can suck it.

So, until something changes on the legislative side, companies will never, ever hire in large numbers in this country ever again. Why would they? When they cut payroll to the bone and make the surviving workers work three times as hard while not even giving them raises to keep pace with the cost of living, companies make money, even in a bad economy.

Also, there are no industries that can supply the amount of jobs needed to turn this country around. Manufacturing is nonexistant, the supposed industry of the future, financial services, has been proven to be a fraud, and retail slumps when the overall economy is weak. So where are these jobs supposed to come from?

And stop with the Obama/Democrat bashing. This is an almost entirely Republican-created shit storm, beginning with the deregulation and merger fetishes of the Reagan years and continuing unabated through the Clinton years until maxing out its corrupt head of steam in the Bushapocalypse.

Roll back the Bush tax cuts, heavily regulate the banking industry, SOLVE THE HEALTHCARE PROBLEM WITH A UNIVERSAL SINGLE-PAYER SYSTEM, and stimulate the economy from the bottom up. This is the only way this country is ever going to turn this sinking ship around.

Yeah, yeah, I know. You guys with your MBAs and your business savvy are laughing in your scotch right now, but as I recall, you guys had the con while this ship was running aground, so maybe it's time for some alternative thinking. If you want things to change, but I'm guessing that all the business/Chamber of Commerce types are only bummed about their own specific predicament and could care less about the greater good. And there you have your vicious cycle.

Oct 08 08:47 PM

[User 497820:]

So where is this growth going to come from? Creation of jobs mostly comes from small businesses here in the US. When there is substandard growth they will not be willing to hire not only because they are struggling to survive before they are looking to hire. Then there is the issue of drops in state and municipal budgets. Reduce in further reduction in hiring. Jobs needs to be created as the prior post at a clip of 200,000 a month to prevent further damage. And these jobs needs to be sustained as full-time not these part-time jobs that people can not build their nest eggs.

Hence, at current valuations I can't see how these stocks are justified at their trading multiples. MAN for example is trading at over 78x multiple. Benjamin Graham would be rolling in his grave to pay multiples such as that. P/B ratio also is getting to be near historic levels. So it is very difficult to find that these stocks are "cheap" when businesses and consumers need to continue to deleverage.

Oct 08 09:31 PM

[LilBob:]

This morning on NPR (I believe it was Chris Connolly) there was some discussion of how hiring is like a rubber band and job losses have gone so far to one extreme that we're likely to see a radical resurgence of hiring once the economy does start to pick up. I think this is a pipe dream. I know right now there are economists waving thier dog-eared copies of Friedman ready to insist that it will snap back, but the snapping back theory is not based in any sense of reality. You have a situation where many were eager to sell goods to developed world consumers without having to pay developed world wage-rates. The aggressive out-sourcing of jobs and depletion of the liquid capital cycle at the consumer level that ensued was simply too great for us to recover from in any short period of time.

Another pipe dream: that increased consumption from China will contribute to an uptick in US production. The Chinese already produce many of the goods we buy because we're too cheap to pay our own workers to produce those goods, what makes any rational person think the Chinese will become big customers of American made goods is beyond me. Granted, the Chinese do have a longer national memory than many in the US and some still sting at the thought of what the Japanese and Germans did during WWII, but we can't build enough Buicks in this country to make a Chinese fueled recovery take place.

Oct 08 09:39 PM

[Ali Mogharabi:]

One of the most dependable indicators of a potential turnaround in unemployment is some consistent increase in part-time/temp workers. Before even the companies that supposedly overcut HR decide to bring them back, they begin filling some positions with part-time workers. Its basically a way to hedge their hiring against the economy potentially declining again. And we haven't seen much of that. Let's see what happens when (if) the stimuli expire. I'd say not much would happen. Just my thoughts.

Oct 09 03:44 AM

[Ali Mogharabi:]

I usually agree with you, but on this one, I'd say the banks are doing the right thing. I'd rather see bank assets (loans) decline in the short term and deposits/cash build up. The credit crisis that we experienced was unbelievable. I'd also like for consumers to save more. In addition, without much consumer demand, I'm just wondering if there is that much of so-called inventory replenishment necessary and if there's demand for credit/loans from small businesses. Just my thoughts.


On Oct 08 07:51 PM conceptwizard wrote:

> Try asking a small business owner whose bank is strangling him by
> cutting credit lines, while his inventory is dwindling, if he about
> to rehire in mass numbers.
>
> The banks are crippling American small business and the consumer
> and the Obama Admin and Congress are letting it happen. Their answer
> is to use rebates and free cars.
>
> We already lent the banks the money, with no stipulation for them
> to lend it back out.

Oct 09 03:50 AM

[Karen Consumer:]

I'm unemployed 15 weeks now, have submitted 186 applications/resumes, and signed up with 3 temp agencies (including Accountemps, a Robert Half company). The temp agencies aren't calling (even though they love my scores/experience), and out of the 186 apps/resumes, I've gotten 2 interviews, 3 "we've decided not to fill the position at this time" and 50 "we've chosen someone else".

Hiring isn't around the corner, it's out of the freaking country.

Oct 09 04:08 AM