OH YE OF LITTLE FAITH

Manpower 2Q04 Employment Outlook Survey (Manpower, Inc., .PDF format via manpower.com)

The results of the Manpower Employment Outlook Survey in the United States include Puerto Rico. Nearly 16,000 interviews have been conducted with employers across the United States to measure anticipated employment trends between April and June 2004. All participants were asked, "How do you anticipate total employment at your location to change in the three months to the end of June 2004 as compared to the current quarter?" Of the US employers that were surveyed, 28% expect an increase in hiring in the second quarter, while 6% plan to decrease staff levels.

This creates a Net Employment Outlook of 22%. Sixty-two percent of the
employers polled anticipate no change in hiring activity, and 4% are uncertain of the job outlook at their companies. The employment outlook has not been this promising since the first quarter of 2001, according to the seasonally adjusted survey results. The job forecast for the second quarter is a steady improvement from the first quarter of 2004 and is nearly twice as strong as it was last year at this time.

Of course, this data is still subject to the half empty/half full pundits on either side. On CNBC this morning, Manpower's CEO (Jeff Joerres) went on to discuss something I've thought for months now: there's concurrently a significant boom in self employment, Subchapter S Corp. formation and LLC's. He said they expect some of that Labor to be eventually pulled back into the corporate realm as demand warrants, thereby bolstering the more traditional metrics of "job growth." Granted, many of those little businesses will simply fail as they're statistically prone to do. But the Fed and the Government's role should be to get out of the way and let capital formation and labor association work itself out in a trying economy. The private sector will inevitably create jobs at a rate the Governement could only dream of if they'd quit meddling.

As to the historical comparison with 2001, which most will agree in hindsight was a waining period, bear in mind that 1Q01 was the END of a string (some 6-8 quarters?) worth of similar levels. Mr. Joerres also reiterated how Manpower has backtested their survey vs. subsequent government payroll reports and it proves to be a highly-correlated leading indicator.

Hiring managers' propensity to hire now seems tempered by two remaining hurdles: 1) FIRING is always easier and actually substantially less risky than hiring - particularly for smaller companies where the bulk of new jobs are created. 2) Given the events of the last 3 years and the implied instability in the future status of tax laws, longer range planning is still murky enough to prompt extra cautiousness.

In any event, comparing the current job growth rate to historical rates which were neither sustainable nor ultimately prudent is like wishing the NASDAQ would hit a 5,100 high next week. Today one wonders how many of the "jobs" along with the other 3,100 index points never really existed in the first place.