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Beige Book reports improved labor conditions

June 05, 2014

Labor market conditions generally improved since the previous report issued in mid-April, according to the Federal Reserve’s Beige Book report released Wednesday. Hiring activity is steady to stronger across most of the country, and several districts are reporting shortages of skilled workers.

The Cleveland and Chicago districts noted an increase in demand for some temporary workers, while the Atlanta district reported a small increase in workers transitioning from temporary to permanent positions.

The Boston, New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis and Dallas districts indicated that employment levels were flat to up modestly. Philadelphia reported that some new hiring occurred but noted that firms remain cautious, while improvement in the labor market has led to increased competition for workers in the Kansas City district.

Some staffing highlights include:

Boston: New England staffing contacts reported higher growth in recent months, with quarter-over-quarter revenue increases in the double-digit range and generally flat year-over-year growth. While the region’s inclement winter weather contributed to soft business activity through the first quarter, billable hours increased by early April as the weather improved. A general uptick in labor demand is concentrated in the legal, internet technology, production, welding and machine operation industries. Labor supply remains tight for specialized roles in the welding, Web development, intellectual property and internet technology spheres. As a result, firms continue to expand their recruiting and social media efforts to attract new talent and gain a larger share of the existing applicant pool. Bill and pay rates have largely held steady, and contacts anticipate growth will continue through the next few months.

Cleveland: Employment has picked up in the manufacturing and construction sectors. Staffing firms reported little change in the number of job openings and placements, with job vacancies found primarily in the manufacturing and oil and gas industries. Several staffing firms noted a shift toward hiring temporary workers.

Richmond: Demand increased for workers in manufacturing, distribution and warehousing, construction, and information V-4 technology. Employers continued to report difficulty filling highly skilled and upper-level management positions. A Maryland staffing agent stated that those challenges put upward pressure on wages, while outside of those positions, wages were stable.

Atlanta: Staffing agencies noted a small increase in transitioning workers from temporary to permanent positions. Firms continued to show a preference towards using capital investment to enhance efficiency over hiring.

Minneapolis: Labor markets continued to show signs of tightening. A number of manufacturers noted difficulty hiring qualified employees to fill positions. A new outlet mall in Minnesota is looking to hire 1,600 workers, a window manufacturer announced plans to add 100 jobs at a Minnesota factory, and a window and door manufacturing facility in North Dakota plans to add up to 125 jobs.

Dallas: Staffing firms reported mixed growth in orders. One contact reported a slight decline in the pace of activity, while another contact reported that demand for direct hires in April was the highest in 10 years but orders slowed somewhat in May. Overall demand remained strong, and some contacts were more optimistic than they were six weeks ago. A staffing firm said that employers are paying higher relocation bonuses for talented personnel, particularly engineers. Wage pressures appeared to be the strongest for skilled workers in the energy and construction sectors, but staffing firms, high tech, transportation equipment, fabricated metals and lumber manufacturers also noted upward pressure. Food, cement, lumber, primary metals, fabricated metals and transportation equipment manufacturers noted continued hiring.

Chicago: Hiring plans changed little from the previous period. However, a staffing firm reported increased demand for temporary manufacturing workers, and several contacts said they had added part-time workers. Demand remained strong for skilled workers, with firms again reporting willingness to spend on training.