Real Estate

Subprime woes weigh on job outlook

The latest forecasts for layoffs, hiring and pay. Plus: Which areas are showing steady growth.

By Jeanne Sahadi, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- The mortgage crisis is likely to make many companies more cautious on the payroll front in the next six months - but some sectors will get hit harder than others.

Employees at companies with closest ties to the housing industry (from construction firms to suppliers to financial service providers) are likely to see job losses and pinched pay growth, particularly in the West and Northeast, said Jeff Joerres, chairman and CEO of staffing firm Manpower.

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And with fewer leveraged buyouts on the horizon due to the credit crunch, investment banks may look to cut back some in their ranks, said Global Insight's U.S. economist Nigel Gault.

But Joerres says he's seeing a relatively stable hiring forecast for several other industries, including at business-service employers such as consulting and information-technology firms.

"It's not so robust that you can't count your money," Joerres said. "But it's still relatively healthy."

Overall, he added, "employers are not euphoric but they're not depressed about hiring, either."

On Friday Sept. 7, the Labor Department is expected to report that 110,000 jobs were added in August and that the unemployment rate held steady at 4.6 percent.

Joerres and Gault both noted that healthcare and education are two arenas immune from the credit crunch and showing healthy job growth prospects. And skilled workers in technology also have good prospects, Gault said.

As for retail, growth is likely to be curbed. "It's not a disaster," Gault said, but retail jobs could take a hit if consumer spending slows, which it may do if credit remains tough to get.

Job cuts

September through December is typically the heaviest period for layoffs. On average, job cut announcements jump 32 percent in the last stretch of the year relative to the first eight months, according to outplacement firm Challenger, Gray & Christmas.

This year, Challenger is predicting an above-average jump in year-end layoffs.

In August, close to 25,000 layoffs were announced by companies with ties to mortgage and subprime businesses. Challenger spokesman James Pedderson expects that number of cuts is actually greater because small construction crews and small independent brokerages don't announce their layoffs.

Hiring and pay

In its semiannual survey of 500 business leaders, accounting advisory firm Grant Thornton found their optimism both about the economy and their business had declined compared with six months ago, as did the percent of respondents who planned to increase their staffing.

The survey was conducted at the end of June and responses from those in manufacturing and consumer products were influenced by growing concern over the quality of goods manufactured in China and over the rising cost of producing them, said Jim Maurer, the national managing partner of consumer and industrial products at Grant Thornton. "There's probably a greater level of challenge going into the fourth quarter than there was six months ago," said Maurer.

Meanwhile, a leading-indicator survey of human resource directors' plans for September found that "manufacturing indicators are down across the board," said Steven Director, professor at Rutgers University's School of Management and Labor Relations, who conducted the survey with the Society of Human Resource Management.

Specifically, there were declines in four areas: companies' plans to increase hiring, what they've been paying new hires, the number of vacancies they had to fill and the level of difficulty they're having finding their "A" players to fill important jobs.

Gault expects, however, that the prospects of those working for manufacturers with ties to export demand (e.g., aircraft makers and their suppliers) will continue to do reasonably well.

The picture is brighter in the service sector, but there, too, the degree of difficulty getting top workers fell as did the pay companies are offering new hires. That likely indicates "the market is softening. It's getting easier to find those good people," Director said.

Gault expects to see some slowing in wage growth in 2008, down from the 3.4 percent projected for 2007.

When you throw in the value of benefits like health insurance, he said, "we're looking for overall compensation growth of 3 percent."

Earlier in the summer large employers were projecting average base pay increases of 3.8 percent.

But even when a forecast for a given industry isn't the brightest, that doesn't mean there aren't solid opportunities for you. Engineers in the beleaguered auto industry, for example, have been in high demand. Here are some other jobs where demand is solid and the pay is good. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.