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Beige Book: Tight labor market, staffing firms report moderate increase

September 08, 2016

Labor market conditions remained tight in most districts from July through late August, according to the Federal Reserve’s Beige Book report released Wednesday. The Beige Book, a collection of observations from the 12 federal regional banks, provides a snapshot of current economic conditions.

Staffing services businesses in most districts reported a moderate increase in activity, with Boston contacts reporting revenue increases of 3% to 30% over last year. By contrast, Philadelphia reported slower growth in staffing demand since the prior reporting period.

Businesses in many districts reported trouble filling job vacancies for high-skill positions, especially those aimed at technology specialists, engineers and selected construction workers. Wage growth ranged from flat to strong, with most districts reporting that wage pressures remained fairly modest.

Observations by staffing firms include:

Boston: Business activity in the New England staffing services industry has been “mixed” through August, with year-over-year revenue up for a majority of responding firms. Both bill and pay rates increased or remained flat for all firms, with increases driven by higher paying positions. Looking forward, firms expect continued labor shortages and strong labor demand in the coming months, and say they will have to employ creative techniques to secure qualified candidates faster than their competition.

New York: One major New York City employment agency reported hiring activity has remained brisk during the usually slow summer months. However, two other agencies in the district report demand for workers has been steady, albeit at strong levels.

Philadelphia: Staffing firms reported a modest increase in activity, while manufacturers continued to report job cuts and other sectors noted mixed trends.

Cleveland: Staffing firms noted an increase in the number of job openings and placements, especially for temporary positions.

Richmond, Va.: A staffing service in Maryland said some employers were raising starting wages to attract new entry-level workers and to retain existing employees.

Atlanta: Business contacts continued to describe a tightening labor market with challenges finding high-quality workers to fill open positions, particularly in fields that require high skills, such as information technology, finance, and engineering. As a result, contacts from staffing agencies noted that demand for recruitment services remained steady.

Chicago: Contacts indicated that competition was growing for lower-skilled workers. Staffing firms again reported no change in billable hours and difficulty filling orders at the wages employers are willing to pay.

Minneapolis: A staffing firm in southern Minnesota said sales activity this summer was the “highest ever.” However, not all companies have been able to procure needed labor. Hours billed at a Minneapolis-St. Paul staffing firm fell from June through mid-August, which the owner said was “nearly 100 percent due to lack of available workers.”

Dallas: Reports of hiring were scattered among service sector companies with staffing firms adding employees and hiring continuing among leisure and hospitality firms. Several contacts noted a tight labor market for healthcare professionals, and labor constraints in the construction sector were ongoing. Staffing services firms said demand picked up, particularly in Dallas, and a slight uptick was seen in Houston as well.