Recruiters See Stronger March US Perm Hiring
By Claudia Hirsch
NEW YORK, March 29 (MNI) – U.S. permanent-hiring activity firmed in March, capping a first quarter of improved job creation as the broader economic recovery builds steam, according to personnel executives.
Recruiters described a slow but steady return to health in the labor market, featuring continued permanent hiring in manufacturing, engineering, information technology and other professional arenas.
Middle- and upper-management job prospects are enlivening. Employer confidence is growing, and layoffs, particularly in the private sector, are declining, they said.
But personnel specialists said risk-aversion remains, and many employers are relying heavily on temporary and contingent workforce additions. And if oil-price shocks persist, consumption could take a hit, with ripple effects in manufacturing, transportation and supply-chain sectors possible.
Wages are still mostly steady, though some are poised to edge higher soon. Candidates are beginning to ask for more generous compensation, but the tide has not quite turned.
John Challenger, chief executive of Chicago-based outplacement consultancy Challenger, Gray and Christmas, said private and government layoffs are ebbing and the overall job-cut rate is light, but he said up until February, the flow of new positions had been sparse.
“In the private sector, if you have a job, you’re pretty safe,” Challenger said. “But if you’re out of work, job creation has been slow in coming.”
Challenger described 222,000 net gain in private payrolls in February as “very, very” positive, “strong for the first time” since the recession.
“The next step is for companies to add people out in advance of demand growth, to take risks and invest in new products, new businesses and new markets,” he said. “That’s the key to sustaining that 200,000-plus number that we saw in February.”
Layoffs in the months ahead are likely to mount as a result of corporate merger and acquisition activity, he said, and noted the recently announced telecommunications deal between AT&T and T-Mobile.
“That’s a positive reason for job cuts, as opposed to demand slowdown, which was behind the cuts in the recession,” Challenger said. “In better times companies have more cash and they’re buying up more companies.”
He said new payrolls of about 150,000 a month or above should offset merger-related reductions.
For now, rising business confidence is outweighing employer concerns over oil-price risks to their commerce, Challenger said. And so far, he has not seen U.S. job consolidation among Japanese companies in the aftermath of the devastating earthquake and tsunami of March 11 and the resulting nuclear crisis.
A national executive recruiter with 15 U.S. offices said she expects the U.S. labor market to continue to improve month-over-month, despite international uncertainty, but she described her current placement activity as more job replacement than job creation.
“They’re filling these vacancies now because business has come back or is in the process of coming back, and many firms don’t have the infrastructure to support the revenue growth,” said Andrea Jennings, chief executive of The Lucas Group, which specializes in middle- and senior-management placements in the $100,000 to $250,000 annual salary range. Her firm’s year-to-date performance has well exceeded company goals.
In the management world, she is seeing the beginnings of a run-up in employment. She reported shortages of qualified applicants across most of her divisions, except for the still-lagging construction sector, and added that Lucas Group is actively hiring recruiters.
Employers, meanwhile, have been steadily adding human resources professionals, typically one of the first departments to see cuts in a downturn, she said.
“Hiring in HR means they’re adding headcount elsewhere in the firm,” Jennings said.
In March, the Lucas Group’s best-performing division has been manufacturing and related industries, with placements in supply chain, logistics, engineering and production supervision and management positions. Durable goods, consumer product and food manufacturers are hiring, she said. That sector had seen some growth in 2010, but this year its recovery has legs, Jennings said.
“Because they need people, they’re willing to pay a candidate with less mainstream experience and train them,” she said. Her firm has a program that places junior military officers in management positions, and she said manufacturers are now filling some of their open slots with these applicants.
Geographically, Jennings said her company is faring best in the middle of the country and the South, though there’s a measure of manufacturing hiring also in the Northeast.
Despite the palpable shift in the market, Jennings said, management compensation has not moved much. Candidates are now emboldened to ask for more, but thus far employers have responded only by edging higher within existing pay ranges.
A staffing executive in the Midwest agreed that manufacturing hiring is roaring back, but most of what she has seen has been on a contingent or temporary-to-permanent basis.
“Companies are still hesitant to come charging in with full-time people, when they don’t know what the long term will look like,” said Terry Moskus, vice president of Express Employment Professionals’ east central zone, which includes Michigan, Ohio, Indiana, Illinois, Kentucky, West Virginia and auto-heavy Ontario, Canada. About 60% of her zone’s commerce is automotive-related.
“We expect the (temp) bubble to deflate at some point, and then we’ll see a rise in permanent placement as companies feel more confident the economy is going to support a rise in their business,” Moskus said.
Even so, she continues to see increasing permanent-hiring business in sales, accounting and finance and human resources, and, more recently, in engineering.
“Permanent has picked up,” Moskus said, and noted an acceleration compared to the fourth quarter. Also on the rise since late last year are evaluation, or temp-to-perm, hires.
“That’s picked up on the shop floor in the skilled trades,” she said. “People are getting hired on quicker.”
Moskus said that though Express’ long-term strategy is not focusing as much on manufacturing-related business as it had in the past, that sector is lighting up the here and now.
“Even though there’s been talk about manufacturing going down the tubes for so long, it hasn’t gone away, and surviving manufacturers are healthier as well.”
Franchisees in her zone report strong orders in distribution and warehousing as well as parts and assembly. Their commerce is so far unaffected by Japan’s situation or by fast-rising oil prices, but the latter could eventually bruise her automotive-related business, she said.
Moskus said Ohio leaped out of the gates at the end of January, having sustained deeper pain for longer than most states during the recession.
“We’re inundated with business in Ohio, which has just blown me away,” she said, describing a “rebirth” of the automotive sector there.
Much of the hiring activity has been contingent, but she said the southern part of the state has seen permanent orders for engineers and long-term contract work for other professionals.
Indiana, meanwhile, is bouncing back so strongly it has begun to encounter recruiting challenges, Moskus said.
“These are a good sign,” Moskus said. “When employers can’t get all the talent they need with temporary associates they, want to go to their own hires. We’re starting to see that swing.”
But Moskus said her zone’s uptrend stops at the pay scales.
“Now you’re lucky if you get a benefits package,” she said. Wages have been stagnant since the beginning of 2010, when they stopped sliding, she said.
A colleague of hers in New Jersey said he has been pleasantly surprised by continued growth in his business this year, after a robust 2010, though again temporary orders have driven much of his upturn.
“We have a lot of very long-term temps,” said Peter Nolfo, who owns Express locations in Fairfield, Hackettstown and Morris Plains, New Jersey and Camp Hill, Pennsylvania.
“Clients do convert (the temps to permanent employees), but mostly in the higher salary levels. And the cycle to convert is much longer than before the recession.”
Even so, permanent-placement business has increased in IT and engineering, said Nolfo, who also oversees the 20 Pennsylvania locations of Oklahoma City-based Express.
“I think our clients are feeling better about their business, but they’re still using more temps.”
The Labor Department is scheduled to release March U.S. employment data Friday at 8.30 a.m. EDT. Payroll firm ADP is scheduled to release its March national employment report Wednesday at 8.15 a.m. EDT.
Editor’s Note: Reality Check stories survey sentiment among business people and their trade associations. They are intended to complement and anticipate economic data and to provide a view into specific sectors of the U.S. economy.