The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
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Atlanta Fed Survey Highlights Regional Employment Plans for 2014
Given that the Federal Reserve’s dual mandate calls for maximizing employment, it shouldn’t surprise anyone that we continuously ask ourselves questions about labor market conditions. But we also ask our contacts. For the third year in a row, we reached out to our Regional Economic Information Network and asked the same questions regarding their employment plans for the year. The survey was conducted during January 6–10 and resulted in 554 responses. The sample represented a wide variety of firm types and sizes, and we want to discuss the results here.
The first question simply asked: Do you expect your firm to increase employment, leave employment unchanged, or decrease employment in 2014? A total of 46 percent of respondents said they planned to increase employment levels, similar to results from the previous two years. Another 44 percent indicated they planned to leave employment levels unchanged, a slight increase from a year ago and almost identical to two years ago. The remaining 10 percent of participants planned to decrease payrolls, down from 13 percent in January 2013 and nearly the same as reported in 2012 (see the chart).
Digging a little deeper by singling out the 46 percent of firms that indicated that they planned to increase employment, we then asked contacts to select the most important factors driving their decision. Participants were instructed to rank the three factors in order from 1 (most important) to 3 (third most important). The results largely mirrored our findings from previous years (see the chart).
A majority cited high expectations for sales growth as the most important reason. The second most often cited reason was the firm’s need for skills not possessed by existing staff. The third reason was that the firm’s current staff was overworked. However, in looking at totals across rankings, another frequently cited issue was improvement in the firm’s financial position.
On the flip side, we asked all participants to rank (in the same manner as the previous question) the three most important factors restraining hiring activity. Interestingly, in all three categories (first, second, and third most important), a majority selected the same factor: keeping operating costs low. Other frequently selected reasons were uncertainties related to health care costs, regulations, government policies, and expectations for low sales growth. These results were also similar to our findings from the previous two years (see the chart).
In a nutshell, we can see that employment activity remains constrained by some of the factors mentioned above. However, as the latest Southeastern Insights, reports, hiring should modestly expand. The latest data from the U.S. Bureau of Labor Statistics, which indicated that net monthly payroll growth for the district averaged 30,200 for 2013 (up slightly from 26,200 a month in 2012), strongly support our conclusion.
By Shalini Patel, an economic policy analysis specialist in the Atlanta Fed’s research department
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