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Beige Book reports broad-based increase in staffing demand

December 04, 2014

Employment gains were widespread across reporting Federal Reserve districts in October and November, according to the Federal Reserve’s Beige Book report released Wednesday. Several districts noted an increase in temporary staffing as well as an increase in temporary-to-permanent job transitions.

With labor market conditions strengthening, firms in the Kansas City and Dallas districts had increased difficulty retaining key workers. Various districts continued to report that firms had difficulties filling positions in IT and engineering, legal and healthcare services, management, skilled manufacturing and building trades, and transportation and warehousing. Most districts reported little change in holiday-related hiring relative to last year, although there were some reports of slightly higher rates of seasonal hiring in New York and Chicago.

Boston reported increased employment in the software and IT sectors, and New York noted financial firms were hiring more workers. Cleveland indicated increased payrolls in manufacturing, construction, and freight transportation, while Richmond cited stronger hiring by service-sector firms. Atlanta reported sizable gains in leisure and hospitality employment. Hiring plans increased in New York, Chicago and St. Louis.

Some staffing highlights include:

Boston: New England staffing contacts generally reported increased business activity through November, with all but one contact citing a year-over-year increase in revenue. This uptick in demand reportedly reflects growth in the healthcare sector and improved business confidence. Several contacts also noted increases in both direct hiring and the temporary-to-permanent conversion rate. Both bill and pay rates trended upward in recent months.

New York: One employment agency noted employers are becoming more flexible on salaries. Another major employment agency in New York City described the job market as exceptionally strong, with qualified candidates getting multiple offers; as a result, employers must often be willing to negotiate on pay and act quickly to fill job openings. In particular, financial firms are reportedly hiring more workers.

Philadelphia: Staffing contacts in eastern and central Pennsylvania continued to report moderate increases in hiring for both temporary and permanent positions. Staffing requests have been broad-based and reflect business expansions as well as replacement hiring. Staffing firms remain upbeat about prospects for the remainder of this year.

Cleveland: Staffing firms reported a drop in the number of job openings and placements, which they attribute in part to seasonal effects. Because of shortages of certain types of skilled workers, upward pressure on wages is felt by general building contractors, subcontractors and freight haulers.

Richmond, VA: A staffing agency in North Carolina reported increased hiring of permanent workers across a broad base of industries. And a South Carolina staffing agent reported increased direct hiring across a diverse set of industries, including engineering, manufacturing, financial services and environmental sciences. Temp hiring increased in the Carolinas, and more clients converted temporary positions to permanent, reducing the pool of talented temporary workers. Contacts reported difficulty finding IT professionals, managers and engineers, as well as manufacturing, transportation and warehouse workers.

Atlanta: Contacts continued to report challenges filling certain positions, namely construction and skilled trade jobs, drivers, and information technology positions. Some businesses also find it increasingly difficult to fill low-skill positions.

Chicago: Contacts again noted strong demand for skilled workers, particularly for those in professional and technical occupations and skilled manufacturing and building trades. In addition, a staffing firm reported an increase in demand from small- and medium-sized businesses.

St. Louis: Firms in aviation, metals, furniture, industrial equipment and automobile parts manufacturing plan to hire new employees and expand operations. Firms in finance, information, and communications services also reported plans for new hiring and expansion.

Minneapolis: In Minnesota, a contact reported wages for skilled construction trades have increased as much as 10 percent from a year ago, and a temporary staffing firm’s representative noted businesses were paying increased wages for some occupations.

Kansas City: Wages grew slightly in the transportation sector, and manufacturers reported modest wage gains as they continued to highlight difficulties finding skilled labor. Labor shortages were noted for machinists, skilled construction trade workers, engineers, IT developers and truck drivers.

Dallas: Some staffing firms plan to increase fees early next year to cover higher costs resulting from the Affordable Care Act. Demand for staffing services was flat to higher since the previous report. Houston and Dallas-Fort Worth continued to be the strongest markets, and most contacts said that workers at all skill levels were in high demand. One contact reported that while direct hiring was stronger, orders for temporary and contract workers were growing as well.

San Francisco: Shortages of workers in skilled construction trades, computer programming, electronic game design, and bank loan origination boosted wages in those sectors. Some contacts in the hotel sector reported that recent minimum wage increases significantly affected overall compensation costs during the reporting period.