The job outlook appears strong for many industries such as technology with the addition of 271,000 jobs in October, a positive sign for Americans still seeking employment.
The unemployment rate in October declined to 5.0%, a sign that the labor market is robust in professional and business services, health care, retail and construction sectors, the U.S. Bureau of Labor Statistics reported today. Employment remains weak for the energy sector as low oil prices have continued to pummel revenue.
IT Industry Continues to Hire
The IT industry continues to hire employees because the demand for the sector's services remains high. The outlook for the remainder of the year and 2016 will show continued growth in the IT industry, said Jack Cullen, president of Modis, the technology staffing division of Adecco. The majority of states or 42 out of 50 have been hiring employees with the largest number of increases occurring in California, Texas, New York and Florida.
“This is a good time for IT professionals and there are lots of jobs available across the country,” he said.
Demand for software developers, systems analysts, project managers and security analysts remains strong for the next few years as more employees are needed to work in big data, cloud services, network security and mobile app development, Cullen said.
“Qualified candidates are calling the shots in their job search and are really able to dictate what they’re looking for in their next role,” he said. “As IT becomes a more integral part of C-suite decisions, there is a larger demand for those that have both technology and business skills.”
Employees who are already employed in this sector should increase their business knowledge while people who have more traditional business backgrounds can make themselves “more marketable with IT skills and certifications,” Cullen said.
More than 50% of the jobs available are in the IT industry, and nearly 40% of IT jobs can be accomplished without a four-year degree, said Brian Kropp, a HR practice leader at CEB, an Arlington, Va. consulting and technology company.
“With the demand for technology jobs increasing, but the supply of computer science graduates not keeping up, we’ve seen some of the companies we work with including, Johnson & Johnson and Microsoft, shift their IT hiring strategies to embrace nontraditional talent pools to fill open roles,” Kropp said. “Technology is central to every sector of the economy and this reliance has left organizations struggling to fill a shocking number of job vacancies.”
Downsizing In Many Sectors...
Additional downsizing in the past few months by companies to lower costs include Monsanto who cut 12% of its workforce along with Caterpillar, ConAgra, HP, Qualcomm and even retail behemoth Walmart.
ConocoPhillips, the Houston-based energy giant, said the decline of oil prices led to a 10% reduction of its employees in September. The energy industry faces headwinds for the remainder of the year and the first half of 2016 as capital budgets will receive additional cuts and the rig count remains slow, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University’s Cox School of Business in Dallas. The market is not expected to “rebalance until the second half of 2016,” he added.
The downturn in energy has resulted in massive job losses and the sector has shed at least 12% of its direct workforce, or 81,000 jobs, since September 2014, especially in the fields of oil and gas extraction, oil and gas extraction services and supplies and oilfield machinery manufacturing, according to the U.S. Bureau of Labor Statistics.
“In reality, there are probably greater job losses resulting from the energy downturn,” he said. “Most economists estimate that energy jobs have a higher multiple than other jobs because of the amount of investment that goes along with this industry. For every job added, another four indirect jobs are added in construction, housing and other professions.”
The layoffs will continue in the industry as more companies consolidate and finalize their acquisitions, including the Halliburton/Baker Hughes merger and Cameron/Schlumberger merger.
A turnaround for the energy sector will not occur until the second half of 2016 because of continued uncertainty of when a rebound will occur, Bullock predicts.
“Most companies are planning for the worst and hoping for the best - when and how the energy market will recover is the biggest impediment to hiring,” he said.
The forecast for hiring is predicted to be encouraging in the near term since the growth in private employment has been 2.2% and companies are adding an average of nearly 200,000 jobs each month, said Ahu Yildirmaz, lead economist for the ADP Research Institute, the Roseland, N.J.-based research arm of payroll processor ADP.
“Barring any notable changes in the economic landscape, we expect the same trend to continue,” she said. “Industries with strong net employment growth included construction and leisure and hospitality.
Larger companies remain concerned about lower oil prices, a strong dollar and a slowdown in emerging markets, which impact the amount of hiring.
“If the oil prices stay low, energy related sectors will probably continue to suffer,” said Yildirmaz. “If the dollar continues strengthen, large global American companies may be impacted.”
Low energy prices, interest rates and the weather are all variables which could affect the number of employees who are hired, said Patrick Morris, CEO of New York-based HAGIN Investment Management. The winter season is always an issue, because extremely cold weather pushes back the amount of construction in housing and shopping by consumers.
“The historic El Niño pattern is more than likely to cause some interesting weather patterns,” he said. “If it is warmer than normal in the Midwest and East, it is a big benefit to holiday shopping.”
Additional layoffs could occur in the energy industry and the impact could spread throughout the U.S., Morris said.
“North Dakota, Texas, Alaska and Louisiana have had the highest employment growth rates since 2008, but what goes up on higher energy prices must go down,” he said.
Higher interest rates will impact small and mid-sized businesses who has outstanding debt with adjustable interest rates and could hinder additional hiring, Morris predicts.
“Every cost increase is either a job cut or results in not hiring someone,” Morris said. “It will be profoundly negative for near term job growth.”