The May jobs report showed a slight uptick in the unemployment rate, with employers adding 175 thousand jobs last month. Jobs were also added in the private sector, meeting consensus at 178 thousand, more than the 157 thousand reported in April.
Brian Hamilton, chairman at private jobs data firm Sageworks, pointed out that growing sales and an improvement in default rates puts private companies in a good position to borrow; however, they seem hesitant to take on debt.
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According to Hamilton, private companies don’t have “short-term memories,” keeping in mind the downturn of 2009. “Privately held companies often use debt to make payroll, so if you don’t see these companies increasing their leverage, that alone may indicate that they are not planning to hire significantly,” the company said in a statement.
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According to Sagework’s data, “profit per employee” figures have increased, meaning managers are doing more with less. Companies cut overhead costs during the downturn; since then, the new-found efficiency gives companies less incentive to hire when they can get by with the current number of employees they presently have.
On a different note, if the fastest growing industries are used as a barometer of good health, there are few sectors that show the potential to hire. Residential construction, computer systems designs and architectural and engineering services all had double digit growth in the past 12 months.
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