At Year-End, Mixed Signals on Hiring

Several major companies have recently announced large job cuts, but overall job growth is holding steady.
Stephen TaubDecember 15, 2004

Is the employment picture improving or deteriorating? It all depends on which data you look at.

In the past few days, Merck & Co. Inc., Cardinal Health Inc., and Delphi Corp. have announced combined jobs cuts of more than 13,000 in advance of the holiday season.

Merck, whose share price and operations have been rocked since it pulled its pain medication Vioxx from the market several months ago, on Tuesday announced that it will cut an additional 700 jobs under a restructuring plan announced in October 2003, for a total of 5,100 jobs eliminated. On Monday, Cardinal Health announced that it plans to cuts 4,200 employees from its 58,000-strong global workforce. And last Friday, auto-parts giant Delphi said it would cut 8,500 positions, in addition to further reductions in discretionary costs and capital requirements.

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At least one notable economist has low expectations for the employment situation in the next few months, but other signs suggest that these huge job cuts may be isolated incidents.

Job growth has averaged 178,000 per month during the past three months, while the unemployment rate for November remained unchanged at 5.4 percent in November. And in raising the federal funds rate by a quarter-point on Tuesday, the Federal Reserve noted in its statement that “labor market conditions continue to improve gradually.”

What’s more, companies seem rather upbeat about the jobs picture for 2005, according to a recent survey of more than 2,500 workers, including 1,000 hiring managers.

Nearly 15 percent of hiring managers plan to add 200 or more workers in 2005. In fact, one-quarter say they will increase their recruitment budgets in the first half of 2005, and more than one-third say they will do the majority of their hiring for the year during the first quarter.

Of those hiring in 2005, two-thirds say they will be recruiting workers for newly created positions. The number one reason for adding new positions: to expand operations.

The top five areas that hiring managers plan to recruit for in 2005 include customer service, sales, health care, retail, and accounting/finance.

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