02/01/2012
Survey highlights regional employment trends
We continue to investigate the path of future employment trends, looking in particular at the hiring plans of our business contacts in the Southeast (of course, those firms could have staff based in other areas outside the region) to complement our analysis of labor market data. Along those lines we reached out to our Regional Economic Information Network earlier this month and asked a series of questions about their employment plans. We also asked about their expectations for wage and benefits increases. A summary of the 456 responses are below. We also make some comparisons to a similar survey we performed in January 2011.
The first question was pretty straightforward: Do you expect your firm to increase, decrease, or stay the same from an employment perspective in 2012? Just under 47 percent of survey respondents said that they expected to increase payrolls over the next year. These results compare favorably to January 2011, when just under 40 percent anticipated higher payrolls for the year. Just over half of the businesses we contacted last January said they expected to keep employment levels unchanged in 2011. In January 2012 that number had declined to 43.6 percent. Just under 10 percent of respondents expect to cut payrolls in 2012, the same reading we found in January.
The next chart probes deeper into the factors behind plans to increase employment. The leading reason remained that expected growth in sales was high among the businesses surveyed. The idea that current staffing levels were either too low or that current staff were either overworked or did not possess needed skills was also noted by many survey participants. Only one in 10 respondents said that the decrease in economic or financial uncertainty was a reason for their plans to increase hiring—but this is an improvement from January 2011 when only one in 20 registered that view.
We also asked what restraints to hiring exist. The need to keep operating costs low was cited as the most important factor. Since we did not include this option in our January 2011 survey, we can't make comparisons to what respondents said a year ago. Weak sales outlooks and policy uncertainty were also cited as important restraints to hiring.
Lastly, we asked about wage and benefit costs increases in 2012. Wage expectations appeared limited, as only one in three survey respondents anticipated increases of over 2.5 percent for the year. About 40 percent of participants said they see benefits costs increasing more than 2.5 percent.
Our conclusions from our most recent survey? At least from the perspective of our business contacts in the region, hiring activity appears to be improving slowly, and cost pressures do not appear to be rising—although margins remain thin. With regard to hiring, results match up with recent trends in regional labor market data. In the last quarter of 2011, Sixth District states added a net total of 85,300 jobs, which is the strongest quarterly gain since before the recession began in 2007, apart from the Census-hiring induced gains in early 2010. In addition, unemployment rates have fallen to their lowest levels since mid-2009 for most Sixth District states.
On the subject of cost pressures, we'll be digging into this issue and broader regional price trends through our new Business Inflation Expectations (BIE) Survey. The BIE measures the inflation expectations of regional firms and their current business conditions. Besides identifying the sources of cost pressures, the survey provides insights regarding businesses' pricing decisions.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
February 1, 2012 in Employment | Permalink
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01/27/2012
"Rats!"
That was the word I mumbled when I saw the headline data from December's employment report for the region's states. The U.S. Bureau of Labor Statistics' (BLS) latest regional and state employment and unemployment report showed that total job growth was a paltry 6,000 for Sixth District states, well below the 31,700 increase logged in November and a similar 31,500 rise in October. Individual state reports were mixed, with Florida and Georgia adding a net 7,300 and 3,700, respectively. Alabama gained 1,100 while Louisiana saw a net increase of only 600. Losing jobs were Tennessee (down 3,100) and Mississippi (down 3,600).
After the U.S. gained 200,000 net new jobs in December, I expected a better report for the region. We've written before about how the region saw deeper job losses than the United States as a whole during the recession and how our employment recovery has been, well, rather tepid. In the three months preceding December, the region experienced somewhat stronger job gains—the strongest pace since the recession began, in fact. In that light, our inability to maintain employment growth momentum in December was a real letdown.
Never one to pass up an opportunity to seek out silver linings, I took a step back from my disappointment and remembered that one month of lousy data does not a trend make. Also, it's hard to dismiss the fact that four of our six states added to payrolls in December, and two of those—Florida and Georgia—were among the hardest-hit states in the country when it comes to job losses during the recession, Additionally, Georgia has been among the weakest in terms of job creation during the recovery. So while the headline number of a gain of 6,000 may be modest, there is some good news there.
More positive news can be seen from the report on unemployment from the BLS's regional and state number for December. Unemployment rates in all Sixth District states declined, and the aggregate unemployment rate for the region fell from 9.5 percent to 9.3 percent. While still elevated, we're definitely moving in the right direction. We had concerns that the decline in unemployment rates may be driven by discouraged workers dropping out of the labor force. Atlanta Fed research economist and policy adviser Julie Hotchkiss has looked into this and wrote last April that "[t]he question remains whether the economy will continue to create enough jobs both to entice people back into the labor market and continue to reduce unemployment at the same time."
The data from our states in this regard are encouraging. Every state in the region has logged declines in the number of people reporting that they are unemployed over the past few months. In fact, the number of unemployed in the region has been declining since July 2011 and dropped by 170,300 in the fourth quarter alone. In addition, state labor forces have been largely stable or increased. The ongoing decline in initial claims for unemployment insurance is also a good sign.
True, unemployment remains elevated throughout the region, and December's job gains for the region as a whole were disappointing. Yet, it's important to note that job gains were positive in four of the six states in the District and that unemployment rates continued to drop.
Also, "rats" spelled backwards is "star." OK, I'm reaching with that one.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
January 27, 2012 in Employment | Permalink
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01/11/2012
Regional economy expands in late 2011
The Atlanta Fed's latest Beige Book reported that:
"Sixth District business contacts described economic activity as expanding at a modest pace from late November through December."
Importantly, the report also notes that:
"Reports from most sectors were positive, yet expectations remained guarded."
Translating from Beige Book-speak, what this means is that (for the most part) our contacts reported their businesses performed well late in 2011, but this performance has not translated into immediate plans to accelerate expansion. They were pleased with their results but did not seem convinced that these results would carry over at the same pace in 2012. We've heard this from contacts from firms of all sizes and from across several sectors.
As a result hiring plans remain modest as well. As our Beige Book reported:
"Contacts across most sectors continued to report modest hiring activity across much of the District. Most of the hiring has been temporary in nature and tied to seasonal employment."
That said, early results from an early January informal poll of our business contacts showed roughly 45 percent expect to increase hiring in 2012, 45 percent see their workforce levels remaining unchanged in the new year, and about 10 percent see further payroll declines. We will be digging deeper into the full results of this survey as the month goes on, and we'll be looking to the actual employment data to see if hiring plans do indeed translate into increased hiring activity.
Part of our hesitancy to ratchet up our expectations for a significant expansion in hiring was also noted in our January Beige Book:
"Firms also noted reluctance towards adding new full-time employees because of uncertainty surrounding healthcare reform, a large pool of both over and under qualified applicants, and because productivity enhancements have made several positions redundant."
Atlanta Fed President Dennis Lockhart talked about the idea of uncertainty in his January 9 speech to the Rotary Club of Atlanta:
"Uncertainty is a nebulous factor. Definition and measurement of uncertainty are elusive. Uncertainty is not as concrete and measurable a fundamental as business balance sheets or public finance, but it's affecting the behavior of consumers and businesses nonetheless. Most of the evidence I've seen for the effect of uncertainty comes from anecdotal comments. These comments reflect on a variety of concerns that are fueling risk aversion. Beyond lots of angst about the direction of the macroeconomy, concerns in 2011 included regulation, taxes, health care costs, and Europe."
Rather than throwing up our hands and writing off "uncertainty" as one of those—as President Lockhart said—nebulous, indefinable factors that may or may not affect economic activity, we do believe that it is having an impact. Lockhart continued:
"There is, however, a growing body of work in the economics profession trying to measure uncertainty, and correlate it to actual spending by firms and consumers. For example, economists at Stanford University and the University of Chicago have built an index based on economic, tax, and forecast uncertainties. Last year, this index reached its highest level since the mid-1980s. The economists concluded that this level of uncertainty has been a significant drag on the expansion."
So while we are receiving information from southeastern businesses that late 2011 activity was positive, we are, like our contacts, guarded about expectations for 2012.
Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
January 11, 2012 in Employment | Permalink
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12/01/2011
Beige Book: Regional activity steady
The Federal Reserve released the latest Beige Book on November 30. The Beige Book is published eight times per year. In it, each Federal Reserve Bank reports anecdotal information on current economic conditions in its district.
Following are highlights of the Atlanta Fed's contribution to the November 30 report:
Overall, our report was little changed from the previous Beige Book, which was released October 19. We wrote that "Sixth District business contacts described the economy as expanding at a modest pace in October through mid-November," which is almost exactly what we reported October 19. In short, our contacts have been rather consistent in their overall assessment of business conditions—activity is positive, but not all that strong. They remain very cautious as well, with very few expressing outright optimism about future demand.
We also wrote that our region's retailers "noted sluggish sales growth compared with September." Based on the better-than-expected start to the holiday shopping season, consumers may have been keeping their powder dry in October and early November. While it's too early to tell if the robust Black Friday results signal what's in store for December sales, we will be following up with retailers to determine overall holiday sales trends. In addition, despite lackluster reports from retail in general, we noted "auto dealers continued to experience robust sales" and that "tourism activity remained a bright spot for most of the District."
Earlier this week, SouthPoint commented on the October employment report for states in the region, pointing out that the September and October data, when taken together, painted an improving picture for the region's labor markets. In our November Beige Book, we wrote that "reports from businesses suggest that hiring plans continue to be subdued and remain weighted toward hiring temporary or part-time labor." Our current read is that although hiring plans may be restrained, such plans are perhaps becoming more widespread.
The bottom line is that our Beige Book report on regional economic activity meshes with the larger view of the economy, reflected by Atlanta Fed President Dennis Lockhart's most recent speech where he summarized his outlook by saying that "the U.S. economy will continue to grow at a moderate pace in 2012. Unemployment will come down slowly."
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
December 1, 2011 in Employment | Permalink
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11/29/2011
Bit by bit
SouthPoint has discussed, frequently, the depth of the employment downturn in the Southeast and the slow jobs rebound experienced by the region. While a couple of months of positive employment growth may only be small steps in the recovery, it is still good news.
The District as a whole gained 34,400 jobs in October. All states within the district added jobs, with Florida and Tennessee experiencing the largest over-the-month increases (see the first table below). In addition, September's total employment increase was revised up from a gain of 46,800 to 50,000. The District unemployment rate decreased by 0.2 percentage points, to 9.8 percent in October. All District states continue to have unemployment rates higher than the national unemployment rate, with the exception of Louisiana (see the second table below). Data from the U.S. Bureau of Labor Statistics for October are listed below.
The September-October average monthly gain for the region was 42,200, which compares favorably to the 38,000 average monthly gain from 2004 to 2007. While two months' worth of data are not enough to claim a trend, these numbers are still impressive; the regional unemployment rate of 9.8 percent, the lowest reading since May 2009, provides further encouragement for the near-term outlook (albeit still remaining elevated and well above the comparable U.S. rate).
Our business contacts continue to convey limited hiring plans, but perhaps the last two months show that hiring—although modest—is becoming more widespread.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
November 29, 2011 in Employment | Permalink
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11/18/2011
The long climb ahead
A colleague of mine here at the Atlanta Fed is an expert rock climber. I'm not talking about scaling some indoor wall, but real rock climbing—Rocky Mountain–type rock climbing. I don't know how she does it. I thought about trying it once several years (and several pounds) ago, but after about three seconds of deep contemplation I chickened out. Probably the smartest decision of my life, seeing how I'm rather clumsy and afraid of heights…
Anyway, maybe it's a stretch to compare my colleague's rock climbing expeditions to what the states of the Sixth District are doing in terms of trying to climb back to where they were with regard to prerecession employment levels. Regardless, it's a useful analogy.
Here's a disturbing fact: Georgia is the only state in the nation that has not seen any recovery in total employment. In other words, only in Georgia is employment still declining—the Peach State has not even begun to climb yet. Here's another troubling detail: Florida has farther to climb to recover the jobs it has lost than any other state in the nation save one. Let me explain.
The first column in the table below shows the percent change in total employment by state from each state's peak employment level before the recession to its trough, or the point at which employment stopped declining. The second column shows the percent change in total employment from the trough to September 2011, the latest month that state-level data are available. As you can see in the chart, Georgia is the only state in the nation that does not have a positive reading in the "trough to present" column, meaning that the current level of employment is at its low point.
The third column simply measures the difference between the two. I call this the "Assuage Gauge"—a positive number means that the current level of total employment has recovered and is above its prerecession level. In other words, the higher the number, the more the employment situation has been alleviated. A state with a negative reading indicates that the employment level is still below its prerecession peak. In looking at the states of the Sixth District, Florida has a very weak reading in its Assuage Gauge. In fact, only Nevada has a poorer reading.
Back to my original analogy: Georgia has not even started its climb, and when Florida looks up at where it needs to go to get back to where it was in terms of total employment, its climb is incredibly steep. Alabama has a long way to go, Mississippi and Tennessee are a bit farther along, and Louisiana is getting close to the summit.
SouthPoint has discussed the Southeast's lagging recovery over the past year, noting in our September 30 post that "the driving force behind the region's economic growth was population gains, which in turn ignited development and, in the case of Florida and Georgia in particular, overbuilding in both residential and commercial space." Let's look a bit more broadly.
Atlanta Fed President Dennis Lockhart has spoken about the nation's lagging employment recovery on several occasions, most recently in Washington, D.C., where he discussed the important role new businesses play in job creation. In late September in Jacksonville, Florida, President Lockhart noted that
"In terms of job creation, we appear to be treading water. Basically, the weak pace of growth in output since the end of the recession has translated to only modest net job creation. Modest gains in the private sector have been partially offset by ongoing losses in the public sector. As a result, there has been little progress in bringing down the high rate of unemployment."
The charts below highlight the divergence between public and private sector employment growth. We use the methodology of "employment momentum," which is a tool to gauge the relative strength of direction of employment. For example, if a data point shows a positive percent change in its short-term measurement (the three-month percent change) and a positive percent change in its longer-term measurement (the year-over-year percent change), we can say that momentum is strong. Data points showing this pattern are in the "Expanding" quadrant. Figures with both short- and long-term negative percent changes are seen as reflecting weak momentum and fall in the "Contracting" quadrant. Those deemed as "Slipping" show a positive long-term percent change, but the short-term measurement has turned negative. "Improving" reflects a negative long-term percent change, but a positive short-term movement.
Each point in the charts represents a state, and the states of the Sixth District are labeled. Two things jump out. First, as President Lockhart noted, public sector employment is much weaker than private sector employment. Only six states fall in the "expanding" quadrant for government employment, and only two states have private sector employment that falls in the "lagging" quadrant. The other is that Georgia not only has lagging government sector employment, but it is only one of two states with lagging private sector employment. Any way you cut it, the employment situation in Georgia and Florida is pretty lousy. The Atlanta Fed's macroblog has investigated the national employment picture for some time. To look more closely at employment trends and other data series for the states in the Sixth District, please see our State Data Digests. We update these on a monthly basis, so check back for updates.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
November 18, 2011 in Employment, Florida, Georgia | Permalink
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11/09/2011
A view from the region
The Atlanta Fed constructs regular reports on economic conditions in the Southeast. The most widely known is the Beige Book, which was released on October 19 through the Federal Reserve Board of Governors. This report includes input from all 12 Reserve Banks.
But we update our Bank's regional economic perspectives on a continuous basis. We do this through our Regional Economic Information Network (REIN), which helps us coordinate the inflow of economic intelligence about the region's economy into the Atlanta Fed's overall view of the economy. The input provided by our boards of directors from Atlanta and our branches plays an essential part in developing our assessment.
In surveys conducted since the release of the last Beige Book, the majority of our directors and business contacts described economic activity as expanding at a slow pace, and their outlooks remained subdued. Retail and transportation contacts noted that consumer activity was tepid and expectations for holiday sales are restrained. Tourism-related spending remained positive, although there are some indications of a deceleration in cruise line bookings. Auto sales remained strong. Homebuilders and Realtors indicated that the housing sector remains depressed, although multifamily sales and construction were bright spots. Manufacturers reported a slowdown in new orders and production.
Since one of the Federal Reserve's mandates is to maximize employment, we consistently ask our contacts about labor conditions. Over the past month we specifically asked them about their workforce plans. Overall, our business contacts and directors indicated that job growth was minimal place across much of the District. Forty-three percent of contacts said they were likely to add to their workforce, but these expectations were in many cases tied to filling vacancies or adding seasonal hires. Importantly, we did not detect much in the way of plans to reduce staffing levels, either. Just over 80 percent of business contacts said it was unlikely that they plan to eliminate any current employees. The accompanying charts highlight these findings.
We heard more reports of businesses still seeking to maximize productivity gains from current employees. Several contacts also remarked that efficiency gains continued to be achieved as firms invested more in technology. In addition, several contacts noted the ongoing trend of reducing their permanent, full-time workforce in favor of part-time help.
Concerning the Fed's other mandate—to maintain stable prices—we routinely ask businesses to tell us about any cost pressures they may be experiencing. Most contacts this period were less concerned about input cost increases, and several noted some moderation. However, they continue to feel the effects of the earlier run-up in many commodity prices. Where possible, companies are trying to pass along some of the increased costs by increasing their prices, but they have to balance that with the potential to lose business. Spotty reports continue of wages pressures that are primarily a result of a short supply of specialized skills such as IT, some professional services and trade skills, and long-haul truck drivers. Overall, wage increases appear to be modest.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
November 9, 2011 in Employment, Prices | Permalink
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10/26/2011
Regional employment: Looking better, but still not great
State employment data for September were released by the U.S. Bureau of Labor Statistics last week, and the report was rather positive for the Sixth District as a whole (see chart 1). Regionally, we added a net 46,800 jobs for the month, the largest increase since February 2011. All states in our region added jobs except Georgia, which saw its fifth straight monthly decline. More on that in a minute.
Florida led the region with a net increase of 23,300. Gains in leisure and hospitality and health care drove September's gains in Florida, but most other sectors also saw net increases. Over the last twelve months, the Sunshine State has added 93,500 jobs—granted, a small dent in the more than 900,000 jobs lost during the downturn, but Florida appears headed in the right direction. Also heading in the right direction is Florida's unemployment rate, which is down to 10.6 percent from its peak of 12 percent in December 2010. The total number of unemployed in Florida is down to its lowest level in two years and September saw a slight increase in the state's labor force, two more positive signs.
Louisiana also saw a solid increase in employment in September. Gains were broad-based, but the increase of 5,000 jobs in government should be interpreted cautiously as the same sector saw a similar decline in July. Stepping back from the monthly data, Louisiana has outperformed the rest of the region in terms of job gains—up 2.4 percent over the past year. In addition, the state's unemployment rate is by far the lowest in the region at 6.9 percent (see chart 2).
At the other end of the spectrum is Georgia. The Peach State lost another 7,100 jobs in September, bringing total losses over the past five months to more than 27,000. Gains in manufacturing, health care and business services were more than offset by declines in construction, leisure and hospitality, and government. In addition, Georgia's unemployment rate ticked up to 10.3 percent. The state is clearly headed in the opposite direction.
We will continue to monitor job growth and unemployment for the region and individual states.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
October 26, 2011 in Employment, Florida, Louisiana | Permalink
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10/06/2011
General Motors reopens Tennessee plant as it seizes market share
Cranking out more than 207,000 vehicles in September, General Motors was the nation's largest auto manufacturer by volume and has gained the most volume in the first nine months of 2011. Conversely, Toyota has lost the most volume so far in 2011 (down 116,793 units from this point last year). GM has been aggressively seeking a cut of Toyota's market share since the supply chain disruptions earlier this year, but recently the firm has announced plans that hint they'd like to keep that increased market share—and perhaps expand it.
Note: Auto production was up 10 percent in September 2011 compared with one year earlier as the domestic Big Three automakers continued to pick up market share.
In a closely followed round of bargaining, GM announced last Wednesday that it had reached an agreement with the United Auto Workers that would add 6,400 manufacturing payrolls to GM facilities around the country. Part of this agreement, though very unconventional, has residents of a small town about 30 miles south of Nashville very excited. It's extremely rare for auto facilities to reopen once closed, but part of the agreement reached last week will once again get gears moving at GM's Spring Hill, Tennessee, plant.
Plant history and new beginnings
The facility opened in Spring Hill in 1990, originally producing the Saturn. The plant was an economic boon for the area, causing the population of sleepy Spring Hill to grow twentyfold. However, nearly twenty years from the date of opening, the factory, like many others, began feeling the pains of the sluggish global economy. In an attempt to adapt to changing economic conditions, the plant underwent a major retooling phase in 2008 when GM transitioned from producing Saturn vehicles to a crossover SUV, the Chevrolet Traverse. However—to make a long, painful story short—it wasn't enough to save the facility, and GM announced its closure in June 2009, ironically the month that marked the official end of the recession.
Roughly 30 miles south of Nashville, the town of Spring Hill, Tennessee, is witnessing a rare occurrence: GM's auto production facility there is reopening.
In May 2009, the unemployment rate in Maury County, Tennessee, was an already-elevated 11.8 percent. With the closing of the factory doors in June 2009, the unemployment rate in the county skyrocketed to 17.3 percent. The unemployment rate has remained elevated for the county since the factory's closing. Although approximately 3,000 workers were impacted by this closure, some workers initially avoided the unemployment line as the GM plant continued to build engines for other GM cars as well as performing operations related to stamping, polymers, and providing service parts and powertrain operations.
One possible explanation for the dip in Maury County's unemployment rate (see the chart below) shortly after the plant's closing was a reallocation of labor to Lansing, Michigan, home of another GM plant where some Spring Hill employees were offered positions (thus causing a decrease in the number of unemployed, which yielded a lower unemployment rate for months following the plant's closing.). Even still, the rate for Maury County is sticking stubbornly around an unlucky 13 percent (as of August 2011, it was 12.7 percent).
Now, however, initial reports from GM estimate a new 1,700 jobs will be created at the Spring Hill facility. Of these jobs, 600 will produce one model, while another 1,100 workers would focus on the production of the second model. In an area where there were 31,190 employees working across all industries in August, there's certain to be a substantial positive impact from increasing employment by roughly 5 percent of the current number of employed people. The plant is already undergoing capital investments that suggest hiring would begin early next year.
Southeastern states hold advantage in recruiting new foreign auto plants
Southeastern states have particularly had success landing assembly plants opened by foreign automaker in the U.S., as explained in the newly released third quarter edition of the Atlanta Fed's magazine, EconSouth. By offering tax breaks, state-funded training programs and other incentives, Southeastern states have secured over half of the foreign automaker assembly plants opened in the United States since 1990. Tennessee could be viewed as a leader of the pack in automotive manufacturing strength; the state has been ranked No. 1 for the second year in a row by Business Facilities, a national economic development publication.
Evidence of this can be seen in the recent opening of the Volkswagen plant in Chattanooga as well as Nissan's lithium ion battery plant, which is currently under construction. But last week's announcement by GM has left Tennessee residents and the state's leaders excited about potential positive employment growth in the manufacturing sector from domestic automakers. At first glance, research economists familiar with the automotive industry believe the Spring Hill plant announcement of 1,700 positions could offer a total gain of 6,000 jobs to Tennessee, once an estimate of indirect job creation is included.
By Mark Carter, an analyst in the Atlanta Fed's research department, and Amy Pitts, an analyst for the Regional Economic Information Network at the Atlanta Fed's Nashville Branch
October 6, 2011 in Automobiles, Employment, Manufacturing | Permalink
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10/04/2011
Digging into the weak jobs outlook
Atlanta Fed President Dennis Lockhart commented on national labor market conditions during his recent speech to the World Affairs Council of Jacksonville:
"In terms of job creation, we appear to be treading water. Basically, the weak pace of growth in output since the end of the recession has translated to only modest net job creation. Modest gains in the private sector have been partially offset by ongoing losses in the public sector."
In the states of the Sixth District, this weakness has certainly been evident. Over the last three measured months (June, July, and August), total net employment has declined 36,600, with government payrolls declining 37,500 and private sector job growth a paltry 900. Local government employment accounts for much of the total job losses with a decline of 25,600. State government employment fell 10,300 and federal government employment fell 1,600 in June through August. While the data are seasonally adjusted, I'm skeptical about the magnitude of the decline in local government employment, as it occurred when public sector K–12 schools were not in session.
But as the chart below shows, even if we discounted local government employment over the summer months, the real story here is the drop in private sector job growth. After posting gains from February through May, private sector job gains decelerated to just 4,000 in June, then declined a total of 3,100 in July and August.
To help us better understand these dynamics, we reached out to our business contacts throughout the region, and we heard several key messages. First, most agreed that there was indeed little hiring taking place across much of the District. Employers are clearly managing their labor supply very tightly.
A significant contributor to hiring restraint was an unclear outlook. Uncertainty was a notable impediment to hiring. While many contacts associated the cause of uncertainty with regulatory agencies and economic policymakers, it is clear from our conversations that the murky macroeconomic environment is also a major culprit. We should not downplay the negative influence of an uncertain economic policy environment on business planning, but we should also recognize that this aspect of uncertainty is only a part of the story.
Despite the uncertain forecast, our contacts were not overly pessimistic regarding the outlook, which is not to say that we detected much optimism, but the absence of panic or despair is a good sign.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research
department
October 4, 2011 in Employment | Permalink
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