While talk of recession continues to dominate headlines, with the fresh job market data issued in May, we question whether there is a recession at all. Overall, the economy lost 20,000 jobs in April, significantly fewer than economists had predicted. Furthermore, April saw substantial growth in professional hiring, adding 39,000 new jobs.All this information supports the healthy activity we are experiencing.
Despite some doomsday predictions, current data indicates that we may have passed the period of greatest risk and could even be on the road to another robust hiring phase. For example, Monster Worldwide, the Internet jobs company, recently reported that its monthly employment index for April experienced the sharpest gain in more than a year. In addition, recent figures on jobs, GDP, business confidence, and consumer spending all tell a consistent story indicating that, while the economy weakened abruptly last fall, there has not been continued deterioration. It seems increasingly probable that the US will skirt a recession this year.
New job orders continue to arrive from all sectors, with consumer packaged goods and pharmaceutical companies leading the way. Energy, telecommunication, and consulting firms are all looking to hire; and we are seeing activity from advertising agencies, insurance companies and retailers, as well – areas we assumed would contract during a soft market. Even the beleaguered credit industry is showing signs of a return to staffing during this second quarter. This continued hiring seems a testament to the constant level of demand for good talent. While other areas may be feeling the effects of the economy more drastically, our clients are still in need of employees with strong analytic aptitude, and the ability to lead the way with data-driven business decisions. The technical and strategic talents of those in the marketing analytics industry are highly desired by today’s companies, and this helps to shield quantitative professionals from the effects of the softening market.
To understand recent and upcoming conditions, it may be helpful to examine a few substantial differences between the current market softness and the recessionary period of 2001-03. Economists frequently describe modern recessions as being “U” shaped, rather the “V” shape of past recessions. Prior to 2001, recessions tended to be sharper, with a sudden spike in layoffs and unemployment rates.The trough was deep, but short lived and the rebound was quick. During the 2001-03 period, the falloff was not nearly as sharp and the bottom not nearly as deep, but the turnaround was slower, with many months of sluggish growth.
While some believe we may be in the beginning stages of this new kind of economic cycle, many indicators suggest otherwise. During 13 of the 24 months between May ‘01 and May ‘03, monthly job losses averaged between 150,000 and 300,000. In contrast, the job losses reported this year are much less dramatic, at 80,000 per month for January through March, and just 20,000 in April. It is also worth noting that unemployment peaked in June 2003 at 6.3% during the earlier contraction period, whereas the current rate is hovering at about 5.0%.
I am happy to say that the impact of the reported soft market on the analytical community seems likely to be minor. We have not heard of any substantial layoffs and salary offers remain aggressive. Our candidates continue to enjoy a steady stream of new opportunities, and filling these highly specialized positions is a persistent challenge for many companies. These are the challenges we welcome. We are here to help you understand and prepare for fluctuating market conditions. Let us know of any way in which we might be able to be of service.
Follow Burtch Works on Twitter or LinkedIn to get the best quantitative career news and blog updates delivered right to your news feed, and check out our YouTube channel for access to all our latest salary information and webinars!