A survey by Manpower Inc. of Milwaukee shows that the hiring outlook for next quarter is the weakest in more than 16 years in the finance, insurance, and real estate businesses, as a result of a contracting banking sector and the slumping housing market.
The survey, which is expected to be released today, predicts that hiring will be "considerably lower" than even a year ago. Three out of four employers in what Manpower calls the financial sector (the finance, insurance, and real estate industries) expect their employment levels to be flat or decline next quarter.
The Manpower Employment Outlook Survey found that the sector's fourth-quarter seasonally adjusted net employment outlook — the percentage of companies planning to hire minus those expecting layoffs — was 5%, versus 15% a year earlier and 19% in the fourth quarter of 2006. The outlook is the most anemic since the second quarter of 1992.
Only 15% of the sector's employers planned to increase staffing, while 12% planned cuts, and 67% expected hiring levels to be flat in the fourth quarter; another 6% were unsure.
A report released Tuesday by Robert Half International Inc. said that chief financial officers at accounting and finance companies expect to increase hiring in the fourth quarter.
The report said executives anticipate a net hiring increase of 5% in the final months of this year — a projection 5 points higher than the third-quarter one. Of the 1,400 CFOs surveyed, 10% said they plan to expand, and 5% anticipate personnel reductions.
The most active hirers are expected to be companies with 20 to 49 employees, Robert Half said.
The banking industry has already experienced major cuts this year that have affected companies large and small. GMAC LLC said last week that it will cut 5,000 jobs, or 60% of the work force at its Minneapolis mortgage unit, Residential Capital LLC, which will close 200 retail offices. Citigroup Inc., punished by bad mortgage bets, eliminated 9,000 jobs in the second quarter. Washington Mutual Inc. closed its stand-alone home loan offices during the second quarter and cut 3,000 mortgage jobs. The Seattle thrift company is now laying off another 1,200 employees in a range of departments.
"In the banking sector, there is clearly still so much uncertainty," Jeffrey A. Joerres, Manpower's chief executive officer, said in an interview last week. "There is an obvious contraction in certain parts of the banking business, and less activity means you need less people. And our survey indicates that's how it will continue to unfold."
Manpower surveyed 14,000 employers in all sectors during the last week of July. Only the construction industry, which has been plagued by the housing recession, forecasted a weaker employment outlook, at 2%, than the finance sector.
The overall employment outlook for all sectors was 9%. The strongest outlook was in mining (26%), the only sector whose outlook improved from a year earlier.
A report the Labor Department released last week showed that the unemployment rate spiked last month to 6.1%, the highest rate since September 2003. Nonfarm payrolls plunged by 84,000 in August — the eighth decline in as many months. So far this year the labor market has shed 605,000 jobs.
"There is no denying that labor market conditions are deteriorating," Mark Vitner, an economist at Wachovia Corp., wrote in a report issued last week.
Several banking executives cautioned over the summer that sudden spikes in unemployment could spur higher loan default rates and cause further credit troubles for banks. Economists say such cautionary notes may increase in frequency this fall as a result of the latest data, and if that happens, it will amplify the concern that many bankers about the prospects of a recovery before 2010.
"Banks are preoccupied with capital and liquidity concerns," Richard J. DeKaser, chief economist at National City Corp., said in an interview last week. "They are likely to remain preoccupied until they know the full magnitude of loan losses, and this will continue to affect hiring levels for some time to come."
Across all sectors, the Manpower survey found that 22% of employers expect to increase staffing levels next quarter, while 13% expect to cut payrolls, and 59% expect staffing levels to be flat.