fordyce forum

The headline US unemployment rate fell from 9.9% to 9.7% in May. Unfortunately most of the decline was due to the hiring of temporary census workers who will hit the streets again in early autumn. The numbers weren’t good, no matter what the Obama administration may say, but negative reaction was likely exaggerated.

When looking at anything as complex as an economy it’s important to look at multiple data points and many of the relevant numbers showed continued signs of slow improvement. Toyjobs has long been partial to U6 which includes underemployed people who would love to have full time work but can’t land any. In May, U6 dropped from 17.1% to 16.6%. We also saw an uptick in the length of the work week and average hourly earnings. Small business confidence in the US rose in May to a twenty month high. These are all “reasons to be cheerful.” It’s also important to remember that the government statistics are always inaccurate and will be revised two more times before they settle on final numbers.

It’s better to evaluate trends rather than specific points in time. Over the last few months the majority of key economic data points have been improving at a slowly increasing rate. TGBF. Things are Getting Better Faster. If we see two or three consecutive months of many economic metrics declining then it will be time to get worried. We will have the final revisions to the May data by then as well.

Let’s try to keep in mind that the big government unemployment numbers include all types of jobs like construction, as well as factories and warehouses where unemployment is exceedingly severe. Most US toy company employees are white collar workers where the unemployment rate has been bouncing around between 4.7 and 5.0%.

That’s not to say that the toy industry doesn’t have its challenges many of which lie in China. While the revaluation of the yuan seems to have been temporarily postponed due to the Europe’s sovereign debt crisis; a prolonged drought is causing Chinese manufacturing centers to operate in a climate marked by rolling blackouts. There is also a severe shortage of workers which has emboldened those still on the job to engage in strikes (see The China Report). Consequently labor costs have already risen 20-30% and will likely continue to rise. If this keeps up consumer-product manufacturers will likely seek new manufacturing centers. Factories are already springing up in Vietnam, after that?… North Korea?… Greece?… Detroit?

Anecdotally, Toyjobs has seen increased new search starts in April and May and the rate of improvement is strengthening. TGBF. Last week I spoke at the Fordyce Forum, an educational conference for senior recruiters. As I talked with the other speakers, all top recruiters in their fields, I heard overwhelmingly that their business had either already turned or was just beginning to turn.

Companies aren’t expanding their staffs from pre-2008 levels but where holes have developed, they are now filling those holes. A year ago they just left them vacant. My ongoing forecast is for a pop in search starts beginning in late August running through September and October. Most toy companies are telling me that they think they are having a good year but that, coming out of The Great Recession, they will remain cautious until they are sure. In late August and early September as goods are shipped and reorders begin the toy industry will be much more comfortable as the perceived improvement in the business becomes tangible. Until then order revisions from retailers are still a concern.

A troubling trend I have noticed is that an increasing number of people, on both the client and candidate side appear to be suffering from misplaced anger. Individuals, families and businesses have found themselves in a period of prolonged economic stress. Frustration is understandable as people feel that they have lost control over their lives. There is an increasing number of long term unemployed, people see their businesses under severe financial strain and even the currently employed feel the stress of doing their own work as well as the work of two other people who were laid off. One thing I can say for certain is that there are very few bankers, mortgage brokers, congressmen or (insert your favorite here) working in the toy industry today. In the toy business at least, it’s a pretty safe bet that anyone you are dealing with is not the cause of the current economic climate.

As you can see in the article below, acting out upon misplaced anger can be the start of an ongoing pattern which certainly won’t help anyone personally or professionally. Most of us are mostly keeping it together but for a few it’s important to realize that things are getting increasingly better. Don’t let this period of stress leave a permanent stain on your reputation. People would be well advised to cool it a little.

All the best,

Tom “Cucumber” Keoughan