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Beige Book: Improved labor markets, mixed results for staffing services

January 14, 2016

Labor markets continued to improve from late November to early January, according to the Federal Reserve’s Beige Book report released Wednesday. Employment increases were evident in reports from seven districts and four districts mentioned signs of labor market tightening.

The Beige Book, a collection of observations from the 12 federal regional banks, provides a snapshot of current economic conditions.

Staffing firms in New York, Philadelphia, Richmond, and Minneapolis cited various positive signs of strong labor demand, including demand from specific technical sectors in the Boston district to a broad range of sectors in the Philadelphia district. Hiring metrics were reported as flat or mixed from staffing agencies in Cleveland, Chicago and Dallas.

Staffing services were somewhat mixed across reporting districts. Staffing firms in Philadelphia reported strong growth for temporary and permanent placements across a range of sectors, while staffing demand in the Dallas district varied by location. Contacts in New York were somewhat less optimistic about the near-term outlook, while contacts in Boston, Philadelphia, St. Louis and Kansas City continued to expect positive growth.

Observations include:

Philadelphia: Staffing firms throughout the third district reported steady, strong growth for temporary positions and permanent placements across a broad range of manufacturing and service sectors. In contrast to a more typical seasonal lull, one firm noted receiving new orders right through the holidays for a second consecutive year.

Cleveland: Staffing firms reported little change in the number of job openings, though there was a bias toward temporary openings. Job placements declined.

Richmond: Temp-to-hire placements increased in South Carolina, according to one staffing firm, and the time to convert to full time shortened further.

Chicago: Demand continued to be strongest for skilled workers, particularly for many professional and technical occupations, sales and skilled manufacturing and building trades. Contacts, however, also cited some pickup in demand for lower-skilled labor, particularly production workers. A staffing firm again reported flat growth in billable hours.

Minneapolis: Staffing firms in Minneapolis-St. Paul and western Wisconsin said mid-December hiring was surprisingly strong. A Minneapolis-St. Paul staffing source said high healthcare costs were pushing up total compensation costs, but limiting wage increases to about 3%.

Dallas: The second round of layoffs in the energy sector continued, and headcount reductions were also noted by some staffing services firms and electronic equipment producers.