It’s been called one of greatest markets for job hunters in recent memory, with unemployment at decades-low levels, and firms virtually scrambling to fill many jobs. But a key measuring stick suggests the good times may be in trouble.
In a head-turning announcement, the National Association for Business Economics (NABE) said Monday that hiring fell to a seven-year low. Of the 101 business economists the group surveyed, only 20% said their firms hired more people over the last three months. Just last July, 34% said they were hiring.
Such results can always change, of course, but the trend so far has been observed across most industries. “The fundamentals of the US economy remain relatively strong, but we are seeing most organizations taking a more conservative view around costs near-term,” says Scott Macfarlane, senior client partner at Korn Ferry and global account lead in the firm’s Financial Services practice.
The results of the NABE survey parallel the decline seen in the September jobs report, where payrolls expanded by just 180,000. October jobs growth was 128,000, beating estimates of 90,000 but still lower than prior months. Part of the reason for the lower expectations is tied to the strike at General Motors, which sidelined 46,000 autoworkers for weeks.
It isn’t just the jobs market that is slowing, either. Third-quarter GDP growth was 1.9%, less than the second quarter’s 2.0% growth. More than two-thirds (69%) of the business economists surveyed expect real GDP growth of 1.1% to 2.0% over the coming year, while only one out of five expects growth of 2.1% to 3.0%.
Macfarlane says the impact of geopolitical turmoil and trade tension on manufacturing is spilling over into the entire economy. As a result, organizations are looking at how to improve operating margins by capitalizing on still-robust consumer demand while not increasing their cost base. “While we aren’t seeing large layoffs yet, organizations are scrutinizing hiring and pay practices more closely,” says Marfarlane.
To be sure, the sudden slowdown isn’t affecting all job markets. Experts say organizations aren’t, for example, pulling back on investment in digital transformation. So while shifting into artificial intelligence, automation, and machine learning may inevitably decrease hiring in certain areas, it also increases the need for human skills in others.
David Farris, a Korn Ferry senior client partner and global account leader who specializes in technology, says organizations are still actively looking to hire and retain talent with critical skills or the ability to influence revenue growth. To be sure, 82% of respondents to the NABE’s business conditions survey said they are having difficulty staffing high-skill positions. “People costs are always a major factor, but talent that can help advance digital strategy is still very valuable and in great demand,” says Farris.