Hiring intentions soften as businesses remained concerned about spending

Employment expectations are increasing year-on-year but dropped for the December quarter as employers remain hesitant about the domestic and global economies and frugal consumers, new surveys reveal.

Chief executive of recruitment research firm Manpower, Lincoln Crawley, says although hiring intentions and job ads have increased substantially from last year, employment expectations have fallen in the quarter due to uncertainty surrounding consumer spending over Christmas.

“We are seeing a little bit of softening in some states, and I read that as the uncertainty as to what’s going to happen around the traditional holiday break this year. Certainly a number of businesses are opting for a higher ratio of contingent or temporary staff.”

The latest Manpower Employment Outlook survey for the fourth quarter reveals a net employment outlook of 19%. However, this represents a decline of five percentage points from the third quarter.

The latest Dun & Bradstreet National Business Expectations Survey for the fourth quarter also reveals employment expectations remain flat at an index of five points.

The shy expectations for the fourth quarter also come alongside recent jobs advertisement figures, showing monthly growth of 2.6% in August, following a 1.4% rise in July, according to ANZ. Brewster says the Manpower survey, which was taken before the election, reveals businesses are simply uncertain about the upcoming holiday season.

In fact, Manpower believes only 13% of wholesale and retail traders expect to increase staff count.

“If you look at what’s happening when the survey was taken, it was before the election, there were lots of discussions about what was going to happen with the mining tax and so on, and there was a genuine nature of uncertainty. We think businesses are being conservative,” Crawley says.

The Manpower survey, which questioned 2,253 employers across Australia, found 27% of businesses expect to increase staff during the December quarter, with 7% expecting to decrease staff and 66% expecting no change at all.

These results are nearly identical to those in the September quarter outlook, when 27% expected to increase staff, 6% expected to decrease staff and 66% recorded no change. However, in seasonally adjusted terms, employment expectations have dropped five points to 19%.

The Dun & Bradstreet results also show businesses are extremely cautious, despite being confident in other areas. About 34% of companies expect profits will increase in the December quarter, with retailers expecting the biggest increase in profits ahead of Christmas.

However, Brewster still believes the results are extremely strong. According to the Manpower survey, businesses in Western Australia expect to hire the most workers with a net outlook of 32%, with Tasmania and the Northern Territory also recording high gains of 23% and 22% respectively.

The finance, insurance and real estate industries have the highest outlooks with a net outlook of 28%, with manufacturing hiring intentions at 11%. The services sector recorded an outlook of 28%, with public admin. and education at 20%.

“We need to put these results in perspective because they are still strong. Particularly in manufacturing, with an outlook of 11%, that is still a substantial outlook and many sectors don’t record that in other nations.”

“Those that decreased, like transportation and manufacturing, only had decreases of between three-six percentage points and those that are growing are recording increases in the teens and twenties. These are strong results and the small dip we have is due to companies being conservative.

Meanwhile, the Dun & Bradstreet expectations survey reveals most businesses are showing signs of improvement for five out of six key indicators including sales, profits, inventories, capital investment and selling prices.

In particular profits expectations have risen to their highest level in sex years rising 10 percentage points to an index of 22. This comes on the back of June quarter results, which revealed 18% of companies recorded lower profits.

The survey also shows 47% of businesses expect to increase sales in the quarter, with 14% expecting a decrease. The inventories index is also at its highest level in six years, with capital investment expectations also rising five points to 18 at a seven-year high.

D&B economic consultant Duncan Ironmonger said in a statement the survey also reveals access to credit seems to be easing, with the number of companies labelling access to credit as a problem dropping to 15% from 19% in May.

“The latest ABS national accounts figures for the June quarter show strong growth in household spending and exports which are likely to be maintained for the second half of 2010,” he said.

“Although government investment expenditure is likely to slow down in the year ahead, the latest ABS expected private capital expenditure current price data for 2010-11 show a massive rise of 24% over the previous year. This will help maintain growth momentum in the economy.”

About 31% of executives believe interest rates will be the primary influence on their business, with 29% expecting wage growth to be the primary influence.