President Bush is working miracles out there. Or so it would seem. His popularity rating is rising in spite of Blairís untimely demise. Terror is once again pin pricking the American conscience and Bush, unlike his feet shuffling counterparties at the UN, is not afraid to confront it both militarily (Iraq ñ however clumsily and unsuccessfully) and rhetorically (Iran and Sudan). But more significantly, and as his fatherís nemesis put it, ìitís the economy stupidî that explains the recent reversal in the beleaguered Presidentís fortunes. Just when the bears were threatening not to hibernate (inflation, cooling real estate, supply-side energy issues) along comes some moderate to good economic news.
Inflation, it seems, may have been licked, meaning that the interest rate cycle could be set to downwards propulsion. Most importantly, if not capriciously, energy costs are coming down. A tax cutting frenzy is also promised ñ giving hope to many Americans who can now make some positive plans for the festive season. But most significantly of all, at least from the recruitment industryís perspective, the US Bureau of Labour Statistics has just released some rather jolly August figures.
Jobs, jobs and more jobs
In spite of some well known structural issues facing the US economy, August represents a mid-term trend that has seen the job count climb by some 2.6 million jobs. No doubt the cynics will read some form of crisis into the detail that backs the trend, but for a country which has known prolonged employment doldrums, the news on the jobs front does not need to be spun as positive because it is positive.
Yet again, it is the relentless rise and rise of the service sector that accounts for the trend rate.
Between them, health ( 60,000), food ( 15,000) and business services ( 26,000) accounted for 101,000 or 79% of the overall increase in jobs before adjusting for losses elsewhere. For many this will signal unease. A services-led economy depends for its sustainability on a ready inflow of cheap imports from China and other Asian producers. What happens, these critics will ask, if the flow dries up when Chinaís inexorable growth plateaus and prices begin to rise in real terms? And even if this eventuality is a long way off, service sector jobs are not immune to in-house economic instability. Tighter monetary conditions over the past year, for instance, have panicked the consumer into safety mode, with savage repercussions for the retail sector. This explains the rather sobering fall in the retail sector jobs count ñ 14,000 in August 2006 and a loss of over 101,000 jobs since August 2005.
For now, though, it is all to the good as the US service sector continues marching full steam ahead. It will be interesting to see what the Federal Reserve decides to do tomorrow with the base rate. With inflationary pressures easing and the real estate sector doubled up in pain, it is tempting to think that a hold position will ensue. If so, this will probably mark the end of the rising cycle, which spells good news for homeowners, consumers and therefore retailers. In fact it may not be long before retail reverses its job losses of the prior year and resumes normal service. And with nerves duly settled the big financial guns will no doubt start firing again. Indeed, business and financial services (that great staple of value add) will in all likelihood fuel a recruitment boom as the big institutions and those who travel in their train scout about for the talent and skills that they will need to lubricate the big deals to come. All in all, itís not a bad outlook. The recruitment industry should be able to sleep easy for months, if not years, to come.
