Fewer firms hiring in 2nd half 2004
Survey shows job growth tame as employers await impending interest rate hike, Nov. election results.
June 25, 2004: 4:21 PM EDT
NEW YORK (Reuters) - U.S. job growth for the rest of the year may be tame compared with the first half, survey results showed Friday, as employers await an impending hike in interest rates and the results of November elections.
The survey, conducted by Chicago-based outplacement firm Challenger, Gray & Christmas, found that seven out of 10 respondents had added workers since the year began.
However only 44 percent of those planned to hire more in the rest of the year. Three-quarters of the 100 small- to medium-sized companies polled said that they don't plan to hire at all.
"Companies -- especially small ones -- do not want to get caught with too many workers if the economy suddenly takes a turn for the worse," the firm's chief executive, John Challenger, said in a statement. "Many probably still consider the economy to be in a relatively fragile state which could easily collapse under the right circumstances."
Though the U.S. economy has added over 1 million jobs since January, putting to rest concerns of a "jobless recovery," businesses are loath to add higher labor costs to their budgets, especially as the Federal Reserve is expected next week to begin raising interest rates from their lowest level since 1958. Higher rates boost the cost of credit.
Persistent violence in Iraq and growing political fervor ahead of the presidential election have created a tense environment in which hiring managers would rather sit back and watch before expanding their payrolls.
"For some employers, there is still some uncertainty tied to geopolitical instability and the election outcome, which is giving some companies reason to pause when it comes to making hiring plans," said Challenger.
For the unemployed, the survey results suggest getting a job will not get any easier for the rest of this year.
"Those who indicated plans to hire emphasized the fact that the job market is still extremely competitive," he said.
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