It's that time of year again. The jubilation of a new year has faded into history and the reasons for companies to hire has faded alongside. Add to the malaise the uncertainty of a presidential election in eight months and the list of reasons for companies to add workers shrinks a little more with each passing day.
If all that isn't enough to stifle one's hope for a great reading on the nonfarm payroll report Friday, also keep in mind companies are in just as much a hurry as most consumers to cut costs amidst rising fuel prices and overall inflation; and cost cutting and hiring don't often mix.
Now a quick glance at what is expected with Friday's report might add a ray of hope to those already seeing greener pastures thanks to a 0.7% drop in the long troubling unemployment rate since last February. Payrolls are expected to increase 213,000 and the unemployment rate is expected to remain steady at 8.3%
With 243,000 jobs already added in January and a beat already this week with the ISM Manufacturing Index number, reasons for optimism may seem reasonable. Still, a few solid economic numbers or quarters aren't all businesses need before seeking to expand their own workforce. Companies need assurances, they need to know that what they do will also benefit their own company and not merely the lives of those they hire. As harsh as such a reality may sound, for companies to go out and hire blindly would, in turn, cause a greater fiasco and more layoffs than if they were to simply stand pat until clearer times arrived.
Causing perhaps the greatest hesitancy in companies willingness to hire in coming months lies the growing possibility President Barack Obama wins reelection. Recent polls show him winning a second term against both Mitt Romney and Rick Santorum by pretty comfortable margins. Although such polls will undoubtedly be closer once a challenger has been officially selected, the fact is none of the remaining Republican candidates have really jumped out as far as being presidential worthy.
All this leaving Obama and his agenda which, support it or not, has crippled a number of businesses and their hiring efforts with a healthcare overhaul that is still being phased in. The added burden, buffered by the growing possibility a repeal of the law may never come, leaves businesses with few options as far as job creation goes.
If that isn't enough to make you turn cautious before the looming report, consider the recent action in many marquee sectors over the past week. Banks have backtracked with Goldman Sachs (NYSE:GS) dropping over 6%, Bank of America (NYSE:BAC) off 5% and Morgan Stanley (NYSE:MS) dropping 17% for the month.
What all this shows is that while the market may still be positive for the year, certain sectors are already highlighting the problems that could potentially lie ahead.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.