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Beige Book: Employment levels improve, mixed reports from staffing firms

July 16, 2015

Employment levels picked up in various industries across districts from mid-May through June, 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.

Service-related firms in particular experienced payroll expansion in Boston, Philadelphia, Richmond, St. Louis and Dallas. New York and St. Louis noted increased demand for human resource professionals to recruit new employees. Reports from manufacturing firms were mixed, with Cleveland, Richmond and St. Louis noting increased job openings and/or payroll gains, whereas manufacturers in Boston and Dallas cited layoffs.

Although downsizing continued in the energy sector in Atlanta, Minneapolis and Dallas, the pace abated in Dallas since the last report.

Accounts of sustained labor market tightness spanned several districts, including Boston, Atlanta, Minneapolis and Dallas. Firms from several districts continued to describe shortages for particular types of skilled labor, predominantly in the construction industry.

Staffing-firm observations include:

  • Philadelphia: Across sectors, general service-sector firms continued to report a moderate pace of growth; however, staffing firms indicated a somewhat more modest pace this period. More than one-third of the firms reported increases in employment — a higher percentage than the prior period. In contrast, contacts at staffing firms generally indicated their activity had been somewhat slower and that their clients have been slow to make decisions to place orders and to hire recommended job placements.
  • Cleveland: Staffing firms reported a pickup in the number of job openings in healthcare and manufacturing; however, placements did not keep pace.
  • Richmond: A staffing agent in Virginia noted difficulty finding warehouse workers and laborers who could pass background checks and drug tests. Temporary workers were becoming permanent employees at a slightly faster rate. An executive at an online agency stated that many job seekers were already employed and looking for a better, higher paying job.
  • Chicago: A staffing firm reported that wage growth picked up some, and that impending minimum wage increases would likely force their clients to further increase wages in order to maintain the premium that they pay in order to attract talent.
  • St. Louis: A staffing contact in the district noted an uptick in hiring for human resources positions, for both recruiting and staff development. Employers continued to note a shortage of qualified employees, especially in the commercial construction industry where companies are experiencing a smaller pool of job candidates. A contact in the IT sector noted labor supply for IT consultants is probably at its lowest level in 20 years.
  • Dallas: Staffing firms noted downward pressure on fees from clients. Two staffing firms said that employers were considering raising wages across the board to retain productive workers. Demand for staffing services was flat to up since the last report. Staffing needs were particularly strong in the professional, healthcare and financial services sectors, although one contact said demand from all non-oil and gas sectors was solid and that orders from the energy sector also stopped declining.