Northwest Arkansas Democrat-Gazette
Job gains at 7-year low, report says
Economists’ survey shows fewer companies raising pay
WASHINGTON — A measure of hiring by U.S. companies has fallen to a seven-year low and fewer employers are raising pay, according to a business survey released Monday.
Just one-fifth of the economists surveyed by the National Association for Business Economics said their companies have added to their work forces in the past three months. A broad measure of job gains in the survey fell to its lowest level since October 2012.
The hiring slowdown comes as more businesses are reporting slower growth of sales and profits. Business economists also expect the economy’s growth to slow in the coming year, partly because tariffs have raised prices and cut into sales for many firms.
“The U.S. economy appears to be slowing, and respondents expect still slower growth over the next 12 months,” said Constance Hunter, association president and chief economist at the accounting firm KPMG.
Hiring may also be slowing because the unemployment rate is at a 50-year low of 3.5%, and many companies are struggling to find enough workers. The survey found that 43% of companies reported shortages of skilled workers, though that figure has declined for three straight surveys. Government data shows that companies
posting fewer available jobs, suggesting that demand for labor is weakening, as well as supply.
Most respondents said their firms have taken one or more steps to address staffing difficulties such as training their staff for promotions. That’s become increasingly common, with 42% doing so versus 36% in July.
Perhaps because of concerns over a weakening economy, businesses are less likely to offer higher pay, even with low unemployment. Just one-third of economists said their firms had lifted pay in the past three months, down from more than half a year ago.
High-skill positions remain hardest to staff, with 82% citing challenges versus 89% in July. Some 45% report difficulty filling mid-skill jobs, more than in July, and a sixth struggled with lowskill posts. Goods producers have the hardest time with mid- and low-skill jobs, while services companies had the most difficulty landing highskill workers.
Companies are also cutting back on their investments in machinery, computers, and other equipment. The proportion of firms increasing their spending on such goods is at its lowest level in five years, the survey found.
Sales are also growing more slowly. Just 39% of economists said they rose in the past three months, down from 61% a year earlier. And only 38% said they expect sales to rise in the next three months, also down from 61% a year ago.
Many business economists blamed President Donald Trump’s tariffs on steel, aluminum, and on most imports from China for worsening business conditions. Thirtyfive percent said the duties have hurt their companies — up from 28% in July — while just 7% said they had a positive effect.
Among goods producers, two-thirds say tariffs hurt their business conditions, down from more than three quarters in July, according to the survey.
“After more than a year since the U.S. first imposed new tariffs on its trading partners, higher tariffs are disrupting business conditions, especially in the goods-producing sector,” Hunter said.
Of those who said tariffs had a negative effect on their companies, 19% said they had lowered their sales and 30% said the duties pushed up costs.
That has cut into profits for many firms. Just 19% of economists said their companies’ profit margins have risen in the past three months, barely half the 37% who reported greater profits a year earlier.
Two-thirds of the economists surveyed now forecast that the economy will grow just 1.1% to 2% from the third quarter of 2019 through the third quarter of 2020. A year ago, they were more bullish: Nearly three-quarters forecast growth of 2.1% to 3% from the third quarter of 2018 through the third quarter of 2019.
With Federal Reserve policymakers due to meet this week, half of the association members surveyed said recent interest-rate cuts haven’t changed their expectations of business conditions this year.
The central bank lowered rates for the first time in a decade on July 31 and made another reduction on Sept. 18. Analysts and traders expect a third-straight rate reduction to be announced on Wednesday.
The association surveyed 101 economists at companies and trade associations from Sept. 26 through Oct. 14.
Of the survey respondents, 41% were from firms with more than 1,000 employees while 15% were from companies with 101-1,000 staff and the remainder from smaller businesses, including some single-person firms.