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Tag: Recession

Job seekers remain optimistic despite looming recession

  • UK

Job seeker confidence higher than during the Financial Crash

There is a recession looming, and the tough economic environment is impacting pay and macroeconomic confidence. Yet, despite this, employees and job seekers remain surprisingly optimistic about their job security and career prospects. This is according to the newly released Robert Half Jobs Confidence Index (JCI).

The new index was created in association with the Centre for Economics and Business Research and revealed that while the JCI fell in Q4 2022 to stand at 19.9 – down 7.5 points from Q3 2022 (27.4) – it is up 58.1 points from Q2 2009 during the global financial crisis.

With confidence increasing significantly compared to the last pre-pandemic recession, UK employers are facing a far more challenging talent landscape this year.

The report also suggests that despite consumer confidence and macroeconomic business confidence being affected by the government instability in the third and fourth quarters of last year, employees and job seekers remained optimistic about their job security, job search, and career progression prospects. This confidence likely originates from the tight labour market, with many companies struggling to hire workers with the right skills.

The data revealed that the job security confidence pillar of the index is up by 159.4 points compared to the final quarter during the recession of 2009.

Despite worries around the cost-of-living crisis and the downturn in real wages since 2009, the index points to remuneration optimism, with pay confidence increasing during the last quarter – a jump of 28.4 points, even though the pay confidence pillar of the index was in in the negative in Q4 of 2022.

Confidence surrounding job search, career progression, and remuneration is on an upward trajectory – an unusual sentiment during economic uncertainty. Despite this, Robert Half has warned that businesses will face an uphill battle for talent. Similarly, companies that decide to cut back on staff will struggle to replace them when necessary.

Matt Weston, Senior Managing Director UK & Ireland, at Robert Half, commented: “There’s no shying away from the fact that whilst the UK economy is facing challenges ahead, however our Job Confidence Index doesn’t paint the picture of labour confidence doom and gloom that one may expect as we head towards a recession. The fact that our data reveals that employees are confident about both their job security and job search and progression prospects suggests that we are going to experience an atypical downturn.

“However, with the complex macroeconomic environment impacting business confidence in recent months, we have already begun to see changes to talent strategies that we predict will continue. Employers have had to be more innovative than ever before when planning and managing human capital, and we expect companies to lean on more agile flexible staffing models, as well as developing permanent employees through upskilling and reskilling programmes.

 “One thing is for sure, though, investment in existing workforces, and developing compelling attraction strategies will be crucial to ensure that employers have access to the skills they require in what will continue to be a tight labour market.”

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Nearly 78% of employers gave pay raises in the past six months

Compensation top of mind despite recession concerns

According to a survey by iHire, 77.9% of US employers gave pay raises in the past six months, despite economic downturn concerns. The pay raises were given due to merit, performance, pay compression or the rising cost of living.

Lisa Shuster, Chief People Officer at iHire commented: “Compensation is top of mind for employers and their workforces. Now is the time for organizations to ensure they are compensating employees fairly while avoiding pay compression. The good news is that most employers do not appear overly worried about a recession and continue to invest in their most valuable business asset: their people.”

Of the 436 employers surveyed, just 22.1% had not given raises recently. Of that 22.1% that did not give a raise, 69.6% said they couldn’t afford to give raises, and 32.6% said they were preparing for an economic downturn or tightening their 2023 budgets. In addition, 13.0% reported poor or stagnant employee performance, and 13.0% were unsure how to determine fair compensation.

iHire also surveyed 305 workers and found that 23.9% of respondents had asked for a raise in the past six months, and 60.3% got a raise upon asking, according to the report. Of the 76.1% of workers who had not asked for a raise, 50.0% already received a raise recently and 25.6% did not know how to negotiate their salary. In addition, 23.2% were afraid to ask or approach their supervisor for a raise and 11.0% did not think their performance was deserving of a raise.

For the report, iHire surveyed 436 employers and 305 workers in 57 industries across the US in February.

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Recession still forecast despite labor market strength

Leading economic index falls in January

The Conference Board Leading Economic Index for the US fell by 0.3% in January to a reading of 110.3 (2016=100). The decrease follows a decline of 0.8% in December, and the US economy is still expected to tip into a recession this year despite strength in the labor market. 

Over the last six months, the Leading Economic Index is now down 3.6%, between July 2022 and January 2023 — a steeper rate of decline than its 2.4% contraction over the previous six-month period between January and July 2022. 

Ataman Ozyildirim, Senior Director of Economics at The Conference Board commented: “The US [Leading Economic Index] remained on a downward trajectory, but its rate of decline moderated slightly in January. Among the leading indicators, deteriorating manufacturing new orders, consumers’ expectations of business conditions and credit conditions more than offset strengths in labor markets and stock prices to drive the index lower in the month.” 

Ozyildirim noted that while the index continues to signal a recession in the near term, indicators related to the labor market — including employment and personal income — remain robust. 

“The Conference Board still expects high inflation, rising interest rates and contracting consumer spending to tip the US economy into recession in 2023,” he added. 

Meanwhile, the annual growth rate of the index rose slightly in January.

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Here’s where the jobs will be during the rolling recessions

The Wall Street Journal sees about a 61% chance of a economic contraction 

Recession-like conditions rolling through the US economy are likely to cause more ripples through an otherwise strong jobs market. 

“Rolling recessions” has become a popular term these days for what the US has faced since a slowdown that started in early 2022. The term connotes that while the economy may not meet an official recession definition, there will be sectors that will feel very much like they are in contraction. 

According to data from popular networking site LinkedIn, that will be true as well for the jobs market, which overall has been strong but has seen weakness in sectors that could intensify this year.  

Economists at LinkedIn have identified multiple sectors that will show varying degrees of tightness this year. 

Rand Ghayad, Head of Economics and Global Labor Markets at LinkedIn said: “Labor markets remain tighter compared to pre-pandemic levels. They’re still resilient. They’re still stronger than what we’ve seen in the pre-pandemic period, but they’ve been slowing down gradually and will likely continue to slow down over the next few months.” 

Other sectors could follow as economists broadly expect that the US will see — at best — slow to moderate growth this year. 

LinkedIn data, which comes from job postings and other data from the site’s more than 900 million members worldwide, is markedly different from government data in an interesting way. 

Whereas the more widely following data from Bureau of Labor Statistics finds an extremely tight labor market, with nearly two open jobs for every available worker, LinkedIn’s ‘labor market tightness’ metric has shown about a 1-to-1 ratio that even looks to be loosening a bit more. 

The implications are important. 

The Federal Reserve has cited the historic tightness of the labor market as motivation for its series of interest rate hikes aimed at taming inflation. If the market trends are unfolding the way LinkedIn data indicates, it could provide impetus for the central bank to ease up on its own tightening measures. 

“Everything depends on what the Fed will be doing over the next couple of months,” Ghayad said. 

Where the jobs will be 

For job seekers, the phrase “rolling recessions” means that it will be easier to get employment in some industries, while others will be tougher. 

LinkedIn identifies certain industries as having slack, meaning that employers are having an easier time filling jobs and don’t need to use as many enticements to find workers. Those industries are government administration, education and consumer services, where applicants outnumber job openings. 

Moderately tight markets include, tech, entertainment, information and media, professional services, retail estate, retail and financial services. In these industries, job applicants are having an easier time finding opportunities while employers are having to step up recruitment efforts. 

Extremely tight labor markets include accommodation, oil and gas, hospice and health care. LinkedIn says that in those fields “employers cannot fill vacancies fast enough.” 

Though hospitality consistently has been the leader in expanding payrolls, the industry is still about half a million below its pre-pandemic level, according to BLS data. That is true even though hotels, restaurants, bars and the like have collectively raised hourly wages by about 23%. 

Ghayad made further comment: “This industry is actually still looking to hire a lot of people. It’s the tightest industry in the United States,” “There’s a lot of demand. They’re looking for people. There’s a lot of shortages. They can’t find people so these industries, services, industries, accommodation and anything that has to do with food or entertainment are booming.” 

Recession fears loom 

From a business standpoint, Ghayad said there have been four industries that have been recession-proof: government, utilities, education and consumer services. He does not expect to see any significant slowdown in hiring there. 

Despite the seeming healthiness of the labor market, many economists think a broader recession is still ahead. 

A recession survey from The Wall Street Journal sees about a 61% chance of a contraction, and the New York Fed’s recession indicator, which tracks the spread between 10-year and 3-month Treasury yields as an indicator, is pointing toward a 57% chance of a recession in the next year. That’s the highest level since 1982. 

Still, Ghayad said he expects hiring to remain strong, even though LinkedIn posts mentioning words such as ‘layoffs,’ ‘recession’ and ‘open to work’ have been on the rise in recent months. 

“We don’t expect sort of any potential downturn to significantly impact the labor markets,” he said. “We’re in a very good position right now. There’s some cooling, but … the labor market continues to be the brightest spot in the U.S. economy.” 

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Number of payrolled employees up by 102, 000 according to ONS

  • UK

UK narrowly avoids recession again

According to the ONS latest labour market report, the UK employment rate was estimated at 75.6% in October to December 2022. That equates to increase in employment of 0.2%. The increase in employment over the latest three-month period is said to have been driven by part-time workers.

The report has revealed that the number of payrolled employees for January 2023 has also increased. It’s up 102,000 on the revised December 2022 figures, to 30 million.

The unemployment rate for October to December 2022 has however, increased by 0.1% on the quarter, to 3.7%. This figure is driven by people aged 16 to 24 years. Those unemployed for over six, and up to 12, months also increased, while those unemployed for over 12 months decreased in the recent period.

Talk of a recession has dominated the news but the latest figures show that the economic inactivity rate decreased by 0.3% on the quarter, to 21.4% in October to December 2022.

The ONS has stated that flows estimates between July to September 2022 and October to December 2022 show that there was a record-high net flow out of economic inactivity, driven by people moving from economic inactivity to employment. This is great news for the labour market as job posts, although decreasing online, remain at record highs.

In November 2022 to January 2023, the estimated number of vacancies fell by 76,000 on the quarter to 1,134,000, the seventh consecutive quarterly fall since May to July 2022. The fall in the number of vacancies reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment.

Growth in average total pay (including bonuses) was 5.9% and growth in regular pay (excluding bonuses) was 6.7% among employees in October to December 2022. For regular pay, this is the strongest growth rate seen outside of the coronavirus (COVID-19) pandemic period. Average regular pay growth for the private sector was 7.3% in October to December 2022, and 4.2% for the public sector; outside of the height of the coronavirus pandemic period, this is the largest growth rate seen for the private sector.

In real terms (adjusted for inflation), growth in total and regular pay fell on the year in October to December 2022, by 3.1% for total pay and by 2.5 for regular pay. This is smaller than the record fall in real total pay seen in February to April 2009 (4.5%), but remains among the largest falls in growth since comparable records began in 2001.

James Reed, Chairman, Reed.co.uk, commented: “The job market remains healthy despite talk of Britain only narrowly avoiding a recession. A key factor driving the boost in job applications that we are seeing is the cost-of-living crisis. People are recognising that one way in which they can secure a pay rise is to move jobs.

“Interestingly, while wage growth remains stable across the jobs market, it is blue-collar roles; jobs that cannot afford such flexibility with remote working, that are seeing the biggest growth in pay. This January, comparing year-on-year, it is customer service and engineering roles that have experienced the most significant pay hikes – up 9.8% and 7.8%, respectively.

“This trend suggests an ‘in-person premium’ when it comes to pay – with organisations having to boost salaries to attract people to roles that cannot provide the flexibility now associated with the white-collar market.”

 Chris Gray, ManpowerGroup UK Director, said: “The UK labour market continues to be very tight and also very resilient. Employers are for now shrugging off the concerns of an economic slowdown but for those looking to hire it remains very tough. Job vacancy levels remain high at around 1.1 million although having reduced a little over the month which points to a slight cooling in demand.

“Pressures on household spending show little sign of easing up – regular pay has fallen by 2.5% when taking inflation into account returning a wage growth average of 6.7% and will be front of mind for both employers and workers alike.

“We’ve heard The Chancellor already outline plans to encourage more over 50s back into the workforce. Money and costs may be a motivator for some over 50s but social stigma also presents a challenge for many within this age group. We have to create the right working environment to overcome some of these issues with more flexibility offered and ensure that employers are listened to, and better accommodate, the needs of this demographic in the workplace. It’s a particularly complex area and there is no silver bullet, but employers and government must work closely together to find the best solutions.”

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UK employers still hiring despite the economic downturn

  • UK

The battle to retain talent continues 

Despite the high inflation and an economic downturn, UK employers appear determined to keep hiring in 2023 with the Net Employment Outlook remaining positive at +19% for Q1 2023. This, according to the latest ManpowerGroup Employment Outlook Survey.

Even though UK employers plan to keep hiring to maintain productivity the survey revealed a decline of 5% compared to Q4 2022. Indications are that skilled talent retention is a top priority for many organisations.

The Net Employment Outlook remains positive in the UK as a whole. Hiring plans are above the national average in London with an Outlook of +24%. However, this is 4% less than the last quarter and 18 % less year-on-year.

Hiring confidence in the North East is strongest at +27% and weakest in Yorkshire & Humberside at +4%.

Chris Gray, Director at ManpowerGroup UK, commented: “Talent retention is going to be a battle for most employers this year. We’re seeing hiring cool for the third quarter running, but the demand for skilled talent is still outstripping supply – meaning employee choice over their working conditions and workplace remains high, resulting in job-hopping for better skills training and benefits.

“This situation can be likened to a leaky bucket – employers have to keep hiring at pace just to maintain position and not lose out amidst an ongoing skills shortage.”

 “Where skills are in short supply, productivity is the first thing to fall. We’re seeing upskilling become increasingly important to employees, so investment is critical if employers want to retain talent and also boost their employees’ productivity.

“Despite prominent news coverage of tech firms laying off staff, the IT industry is still struggling to find skilled talent more than any other sector. Demand for tech skills is outstripping supply, even though the data tells us there is great enthusiasm for working in tech if the skills training is available. Employers need to provide upskilling and reskilling opportunities to attract and retain the best talent.

“The Finance sector is struggling more than most to retain skilled talent. There is a longstanding challenge with reskilling in the sector. Firms are having to hire at higher-than-average rates to bring in new talent because there aren’t sufficient reskilling and upskilling opportunities to provide high-value employees with high-demand skills, resulting in attrition. We’re especially seeing younger employees leaving the sector because they lack mentor figures and upskilling opportunities.”

 

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SMEs reluctant to hire more staff in 2023

  • UK

43% of small business owners say that a recession is their main concern for 2023

With the shrinking UK economy, high inflation, and increased interest rates affecting consumer spending, fear of the looming recession is taking hold among small business owners. This is according to new SME Outlook 2023 research from the small business lending company, iwoca.

The research found that:

  • 43% of small business owners say that a recession is their main concern for 2023
  • With the rapidly increasing cost of energy, raw materials, and labour scarcity, inflation is the biggest challenge for 38% of small businesses
  • 29% say decreased consumer spending is a key concern
  • A further 38% say that increased business running costs are at the top of their list of worries
  • 76% of small business owners have some concern that energy bill support for businesses may be reduced in the first six months of this year
  • 32% of SMEs are significantly concerned about the potential decrease in government energy support
  • 25% of SME owners expect their turnover to shrink over the coming months
  • 43% believe that they will personally be worse off by the end of 2023
  • Only 26% of small businesses expect an increase in revenue over the next year. This is down from 28% at the beginning of 2022.

When looking at hiring in 2023, small business owners expect to limit hiring in the next 12 months. Seventy-nine percent of small business owners expect to employ the same number of workers this year as in 2022. Only 7% expect to employ more staff this year, 2% less than last year.

Seema Desai, iwoca’s Chief Operating Officer, said: “This recession presents extreme uncertainty for small businesses. As big banks retrench, our job as a specialist SME lender becomes even more important. Business owners are going to need finance to help with cash flow, pay staff wages, increase stock and of course cover things like higher energy bills and cost of materials.”

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The US continues to add jobs despite declining employment trends

Recession concerns mount up 

Despite the US adding 528,000 jobs in July, The Conference Board’s Employment Trends Index saw a drop, showing signs of slower job gains ahead. The organization also showed concern about a possible recession.

July’s Employment Trends Index level of 117.63 dropped from June’s downwardly revised reading of 118.71.

It is thought that slower job gains are likely to bring the labour market in line with the rest of the economy, which Is already seeing a slowdown in activity. The Conference Board, however, expects the US unemployment rate to remain below 4.5% in 2023. It was 3.5% in July.

Frank Steemers, Senior Economist at The Conference Board, said: The Employment Trends Index declined in July and has now been on a downward trend since March 202. While the US labour market is currently still robust, the recent behaviour of the index signals that slower job gains should be expected over the next several months.”

“It is increasingly likely that the US economy will fall into recession by year end or early 2023, with the Fed expected to continue raising interest rates rapidly over the coming months.”

“While businesses are currently still struggling with severe labour shortages, they may soon see some reduced pressure in recruitment and retention difficulties as economic activity cools.”

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Consumer confidence falls for third consecutive month

17.0% of consumers said business conditions were “good,” down from 19.5% in June

According to the Conference Board Consumer Confidence Index, consumer confidence fell moderately in July following a larger decline in June.

It marked the third consecutive month of declines in the index, which now stands at a level of 95.7, down from 98.4 in June.

Lynn Franco, Senior Director of Economic Indicators at The Conference Board said that the decrease was driven primarily by a decline in the Present Situation Index. The Expectations Index held relatively steady, but remained well below a reading of 80, suggesting recession risks persist.

Franco said: “Looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months.”

Inflation and surging gas and food prices remained top concerns for consumers and weakened their expectations, Franco went on to note. Meanwhile, purchasing intentions for cars, homes, and major appliances have softened further in July.

Present situation

  • Consumers’ appraisal of current business conditions was less favorable in July. 17.0% of consumers said business conditions were “good,” down from 19.5% in June. However, 24.0% of consumers said business conditions were “bad,” up from 22.8%.
  • Consumers’ assessment of the labor market was less optimistic: 50.1% of consumers said jobs were “plentiful,” down from 51.5% in June, and 12.3% of consumers said jobs were “hard to get,” up from 11.6%.

Six-month outlook

  • Consumers’ optimism about the short-term business conditions outlook was mixed in July; 14.0% of consumers expect business conditions will improve, down from 14.6% in June. Conversely, 27.2% expect business conditions to worsen, down from 29.7%.
  • Consumers’ optimism about the short-term labor market outlook was also mixed;15.7% of consumers expect more jobs to be available, down from 15.9% in June. However, 21.4% anticipate fewer jobs, down from 22.2%.
  • Consumers were more pessimistic about their short-term financial prospects. The index found 14.7% of consumers expect their incomes to increase, down from 16.1% in June, while 15.7% expect their income to decrease, up from 15.3%.
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Firms hesitant to hire amid recession concerns

60% of companies said they need more employees to manage their workload

According to poll data released by Express Employment Professionals, companies are becoming more hesitant to hire amid worries about a possible recession and other concerns.

Nancy Reed, an Express franchise owner in Texas said: “In our market, the big fear is a recession. Businesses aren’t confident in the future, and recession talk has employers waiting to see what will happen next.”

According to Reed, employers have been tolerating more absenteeism, tardiness and less experience, but that is changing.

“Now, they are holding off to see what happens,” she continued. “Managers will hire that skilled employee who is ready to come back but are holding off hiring any extra help until they see what will happen with the recession.”

Businesses aren’t panicking yet, but there are signs of cautious hiring, said Chris Cary, an Express franchise owner in Virginia.

Cary said: “In one of our markets, we are not seeing this rear its head dramatically at the moment, but in speaking with business owners and leaders, there is a sense of what is around the next corner with inflation and chatter of a recession.”

According to a poll by Express Employment Professionals that took place in May, 60% of companies said they need more employees to manage their workload but don’t have the capacity to hire them. Of those who lacked the bandwidth to hire additional employees, 48% reported it’s because their company is adjusting its recruiting/hiring strategy. In addition, 42% said their company is waiting to see if the workload will level out before hiring additional employees.

Other concerns: 32% said upper management has not approved hiring of additional staff, and 32% do not have enough money in the budget this year to hire additional staff.

The survey was conducted on behalf of Express Employment Professionals by The Harris Poll and took place between May 3 and May 23. It included 1,003 US hiring decision-makers.

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