The employment picture in 2012 is looking pretty bright. Companies have kicked off the year by hiring more as the economy shows some strong signs of improvement. Based on the Q4 2011 Vistage CEO Confidence Index, hiring is definitely on the minds of CEOs with 94 percent saying they expect their firm’s total number of employees to increase or remain the same in the next year.
A flurry of data that has come out in recent weeks suggests that the surge in economic optimism about the year ahead has some legs to stand on.
Government figures show that in the past three months, the number of jobs added to the labor market has averaged 143,000 a month. The average in the previous three months was 84,000. As fewer companies are cutting jobs, the number of people applying for unemployment benefits has fallen to its lowest level in nine months, according to the Labor Department.
In another quarterly survey by the ManpowerGroup, the news was also good with more U.S. employers saying they plan to hire in the first three months of 2012. There are other factors contributing to the jobs optimism. Consumer confidence is up, more people are buying cars and factories are making more goods.
More signs of life in the labor market and overall economy:
- Fewer people sought unemployment benefits last week than at any time in nearly four years. The drop was the biggest in more than six years with the total just 352,000. When applications fall consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate.
- Manufacturing expanded in the Northeast in January, according to surveys by the Federal Reserve banks of New York and Philadelphia. A report from the Fed followed saying that factory output across the country surged in December by the most in a year.
- Bank lending, which all but froze during the depths of the financial crisis, is on the rise. JPMorgan Chase, the nation’s largest bank, said its lending to businesses rose 12 percent in the October-December quarter compared with the same period a year earlier. Lending to mid-size companies also picked up. At Bank of America, average loans to mid-size businesses grew 4 percent in the last three months of 2011. The stranglehold on credit has been a major factor in why smaller businesses have been unable to expand and increase hiring.
- Inflation appears to be peaking after surging last year. Consumer prices were unchanged in December, in part because gas is cheaper. Lower inflation gives consumers more spending power. It also gives the Fed leeway to keep interest rates low to help the economy.
- In the latest industry survey by the National Association for Business Economics, about two-thirds of the panelists said they expect to see real gross domestic product top 2 percent between the fourth quarter of 2011 and the fourth quarter of 2012. Only 28 percent see GDP expanding between 1.1 percent and 2 percent – down from 70 percent in October. But few expect growth to top 3 percent this year.
But strong job growth is what the economic recovery hinges on and it was solid in the final six months of last year. Job openings have risen by about 35 percent since the recession officially ended in June 2009.