Job growth was anemic in July due to large government job cuts. There was job growth in the private sector but it was less than expected. Businesses are waiting for consumers to start spending while consumers are waiting for companies to start hiring. It reminds me of a junior high school dance – nobody wants to be the first to step out.
There are two things we should keep in mind. First, all the journalistic doom and gloom keeps people’s eyes glued to the screen/page which helps sell TV, print and internet advertising. The entertainment/news business has been going through its own protracted slump and they are pumping out the pessimism for all it’s worth.
Secondly, July and August are always slow when it comes to both retail sales and hiring. People are on vacation, outside, at the pool or hiding in their air conditioned homes instead of skulking around retail outlets. Companies have different people on vacation at different times and it is very difficult to get much interviewing or hiring done. Hiring slows even more in the seasonal consumer goods business as companies wait until retailers receive their pre-holiday shipments before they pull the trigger on spending decisions.
Economic indicators have been mixed but the economy is NOT falling off a cliff. That July employment statistics were weak really isn’t that surprising. I would expect the August numbers to be unimpressive as well. It won’t be until we get to the end of September and end of October numbers that we will have a clear vision of which direction the economy is headed.
Most toy companies are telling me that sales into retailers are up (sell through to consumers remains a question mark) but that there continues to be pressure on margins. Labor costs are up and the yuan and material costs are up marginally. Factories are trying to raise prices.
Our forecast remains that there will be an increase in toy industry hiring beginning in September and running through the end of the year. I am a little more concerned than I was that we may need one more year to reach that point in the cycle but I am going to wait for end of September and October economic numbers before succumbing to pessimism. While things certainly are not good they are already vastly better than last year.
You will likely notice that our Toyjobs postings are currently a little thin. Partially that is due to a number of searches that we recently completed. Additionally, we are currently in the gap right before shipments hit the retailers’ warehouses. I can say that we’ve been having a number of constructive conversations with employers and I expect a fatter list of toy company jobs after Labor Day. So, steady as she goes. Keep manning the oars. Things could go either way from here. We’ll know in November.
All the best,
Tom Keoughan
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