Employment Prospects Looking Up

During the last few years, a lagging job market has left some economists skeptical about the stability of the economic recovery. But according to the second quarter 2004 Manpower Employment Outlook Survey, employment opportunities may be on the rise.

Of the nearly 16,000 U.S. companies surveyed by Manpower, 28% planned to hire workers during the second quarter, whereas only 6% planned employment cuts. Sixty-two percent expected no change. These numbers mark the third straight quarter of increased hiring projections and the most positive outlook among businesses since 2001.¹

Hiring increases are expected in all regions of the United States and in all sectors of the economy. Employer confidence is highest in the construction and manufacturing sectors, with construction posting the strongest numbers since 1978. And the improved hiring outlook is not confined to the United States. Companies in 18 of the 19 countries surveyed plan to add more jobs than they eliminate in the second quarter.²

Of course, the Manpower report looks at projections, not actual hiring, but a number of factors indicate that employers' positive estimations are well within reason.

During the last few years, surging productivity, or output per worker, has kept hiring at a minimum because companies have been able to produce more with fewer employees. In 2002, productivity grew at a 5% rate - the fastest in 50 years - and in 2003, it continued to soar at a 4.4% rate.³

However, recent increases in demand may force companies to add employees in order to meet higher production requirements. According to the Federal Reserve, industrial production rose by a stronger-than-expected 0.7% in February, and manufacturing output rose by close to 1.0%.⁴

The real test for second-quarter job growth will be determined by actual payroll data, which is released monthly by the Bureau of Labor Statistics. In February, businesses added 21,000 new jobs, and payroll continued a six-month stretch in positive territory after spending most of 2003 in the red.⁵

Since the 2001 recession, market watchers have branded the economic cycle as a “jobless recovery,” but that may be changing. Sustained improvement in the job market could bring welcome optimism among economists and investors alike.

1-2) Manpower, 2004
3, 5) Haver Analytics, 2004
4) Investor’s Business Daily, March 16, 2004

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