No Jobs Yet: CFOs Say Hiring May Not Revive Until 2011 or 2012
Chief financial officers at U.S. companies are increasingly pessimistic about the job market over the next six to 12 months: Results from two independent surveys say most companies don't plan to do any significant hiring until 2011 or beyond. Although both surveys showed that most CFOs expected some revenue or earnings growth over the next six to 12 months, that wasn't enough to make them enthusiastic about adding headcount.
In spite of projecting a 12% rise in earnings and a 9% boost in capital spending over the next 12 months, nearly 60% of U.S. CFOs responding to the Duke University/CFO Magazine Global Business Outlook survey said it will be 2012 or later before employment at their companies returns to pre-recession levels. Similarly, 80% of CFOs and other financial executives responding to the Business Performance Innovation Network/Adaptive Planning Q2 2010 Business Volatility and Variables Survey said they don't expect meaningful and sustained jobs growth until 2011 or beyond, even though 51% expected their company to experience revenue growth over the next six months.
Both surveys identified economic uncertainty as the main reason for the pessimism about hiring. The main areas of concern include health care reform costs, the strength of the U.S. economic recovery, global economic instability (particularly in Europe), weak consumer demand and access to credit markets.
Small Businesses Are Having More Trouble Borrowing Money
Campbell Harvey, a professor of finance at the Fuqua School of Business at Duke University in North Carolina, and founding director of the Global Business Outlook survey, tied the lack of hiring to the lack of available credit for small businesses.
"Our results show an extraordinary 44% of small businesses restricted their capital spending below desired levels because of borrowing difficulties," Harvey said. "These capital projects create jobs both today and over the longer term. The continued credit problem makes it inevitable that we will see very high levels of unemployment not just in 2010, but well beyond."
Harvey maintains that as many as a third of small businesses are having more trouble borrowing money for expansion and capital spending now than they were in 2009, during the height of the credit crisis. With limited money to create new jobs and with all the uncertainty, the survey projected that employment would only rise 0.7% over the next year, with temporary employment falling 0.2%.
Respondents from the Business Volatility survey said that over the next six months, 22% would make additions to their staff, 49% would make no changes and 29% expect to have fewer employees.
In June, the Labor Department reported that the jobless rate fell to 9.7% from 9.9% as 652,000 workers left the labor force.