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Is a Hiring Boom on the Way?

Since the recession, companies avoided hiring new employees by pushing existing staff to work longer and harder. But experts say employers may have squeezed everything they can out of their workforce — and now have no choice but to start hiring.

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Early Thursday, the markets were already anticipating good news on the hiring front: The Dow rose more than 200 points Thursday morning after Automatic Data Processing reported that private businesses added 201,000 jobs in August.

But productivity data has some analysts thinking that more growth is on the way. Productivity, a measure of output per hour worked, increased 1.2% in the second quarter compared with a year ago — the fastest pace of growth in nearly two years, the Department of Labor reports. While that is still short of the long-term average growth of 2%, productivity seems to have hit a plateau, says Erik Johnson, a U.S. economist with IHS Global Insight. “It’s not sustainable,” he says. “At some point, you’re going to max out and need to find other ways to increase output.”

Indeed, history shows that productivity typically falls off after an increase like the one seen last quarter, says Johnson, who expects productivity to drop off in the third quarter as companies increase hiring. A similar drop occurred in the first quarter of this year, when productivity fell by .5% annually as the rate of job increases sped up. While labor growth does increase production, the boost often isn’t immediate, because companies may have to train those newer workers, Johnson says.

To be sure, companies may remain hesitant to bring on new workers, given their continued uncertainty about the economy. Some employers are already reining in spending ahead of the U.S. presidential election and a “fiscal cliff” of automatic spending cuts and tax-break expirations that will go into effect next year if Congress fails to act. The debt crisis in Europe could also hurt profits for U.S. companies, which get a chunk of their profits from business overseas, advisers say.

Hiring could also be deterred if interest rates rise and the Federal Reserve holds back from rolling out more monetary stimulus, says Madeline Schnapp, director of macroeconomic research for TrimTabs Investment Research. That could lead to a scenario where the workers that don’t get the help they need begin to burn out and move on to other companies or produce lower quality work, says Schnapp.

Investors may have to wait until the Labor Department releases its monthly jobs data Friday to get a clearer picture on where the economy is headed and whether the Fed may be spurred to take action. Expectations are that the economy as a whole added 125,000 jobs in August.

 

 

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    • Job Boom??? You have got to be kidding.. The Company I work for has fired over 500 people since 2008.. They are saying more people will be let go soon.as the investments in new ways to cut costs are paying off.So that said I work for one Company.. I can not imagine how many other Companies are doing the same.. Good for profits higher stock prices.. lower borrowing costs.. fewer employees.. less health care expenses.. You get the drift.. It is a JOB BOMB not BOOM

    • Hiring boom? Maybe globally but not in the US. Americans have no special skills that cannot be easily replicated elsewhere, at a lower price. That’s why all the “job growth” here in the US has been in low pay work since 2009.

    • Attention Name; roll with the punches.. no big improvement ahead.. did you read Bank pf America eliminating 6,000 jobs.. Lockeed in Southern CA eliminating 600 jobs.. Just about every day someone is announcing more lay offs..I do notice help wanted sign NOW HIRING at McDonalds and small retailers.. low paying jobs.. If this is what you say roll with the punches opportunities.. you must not be living in thr real world..Obama is creating low paying jobs… Where are the new higher paing jobs for the average American other than the oil rigs and fields.. Which Obama wants to kill.. No pipe line.. Everyone remember.. roll with the punches???????

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