Finance Professionals Don't See US Companies Hiring Until 2011
Significant hiring won’t begin at most US companies until well into 2011, even though the US economy will continue its modest recovery next year, according to professionals in the finance departments of US companies.
The 2010 Business Outlook Survey conducted by the Association for Financial Professionals (AFP) and underwritten by Wells Fargo & Company shows that, while more than a quarter of respondents indicate that their organisations will shrink their payrolls in 2010, 46% expect that their organisations’ workforces will be stable in the new year.
When hiring begins, most finance professionals expect payroll growth to be modest at first. Of organisations surveyed, 25% anticipate returning to pre-recession staffing levels in 2011; 32% expect a rebound in 2012; and three out of 10 do not expect their organisation’s payrolls ever to return to pre-recessionary levels.
“AFP members have played a critical role in maintaining the financial stability of their organisations through the recession,” said Jim Kaitz, president and chief executive officer (CEO) of AFP. “As we look ahead, AFP will continue to work with policymakers to ensure that legislative initiatives have a positive impact on potential job growth.”
Even if the recession might have ended by a textbook definition, nearly 90% of financial professionals surveyed believe that the US economy has yet to enter a period of sustained economic growth. Fifty-one per cent do not see economic growth beginning until the second half of 2010, and nearly a quarter do not see it happening until at least 2011.
Factors that finance professionals think will affect economic growth include consumer demand, the growing Federal budget deficit, rising health care costs and access to credit. Further, respondents agree that regulatory reforms might moderate future shocks to the economy, but these reforms also might come at a cost.
More Cutbacks if Credit Remains Tight
In the case of credit, survey respondents see only minor improvements in access to credit compared with this time last year. Although fewer organisations (18%) than in previous AFP surveys report that credit had become scarcer during the past six months, only 16% report that it had become more plentiful. Only a quarter of financial professionals expect their organisations’ access to credit to improve in 2010.
If the ability to obtain credit does not improve by mid-year 2010, then 55% of organisations expect to take additional actions to conserve cash, which might include:
Any of these actions would be on top of the measures that 96% of organisations surveyed had taken since the beginning of the financial crisis in September 2008.
“This has been a challenging time. Yet we are seeing the markets stabilise, and opportunities are emerging,” said David Trotter, head of treasury management sales at Wells Fargo. “Credit is still top of mind, but looking ahead, financial professionals have become more efficient and better at controlling their cash due to the challenging environment.”
Rate Hikes Seen in Q2 2010
Also looking ahead, 59% of financial professionals anticipate a rise in the Fed funds target rate during the second half of 2010. Eleven per cent of survey respondents believe the first rate hike will occur sooner – during the first half of 2010 – while 30% anticipate the first rate hike will not occur until 2011 or later.