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As economy slows, jobs recovery continues

La Dove, a Florida hair care products manufacturer, is going ahead with hiring plans despite dealing with rising raw material costs.La Dove, a Florida hair care products manufacturer, is going ahead with hiring plans despite dealing rising raw material costs. By Chris Isidore, senior writer


NEW YORK (CNNMoney) -- NEW YORK (CNNMoney) The economy may be losing steam, but that won't stop companies from hiring.

Businesses have added more than a half-million jobs this year, the best three-month gain in private-sector employment in five years. And that momentum should continue.

A year ago, a false start in business hiring came to a sudden end when the economy started to slow. But experts believe the nascent hiring boom has a better chance of weathering the economic headwinds this time around.

"It looks like that expansion phase probably has some legs this time," said Madeline Schnapp, director of macroeconomic research for TrimTabs Investment Research.

Businesses have wrung everything they can out of their workers during the past year. Once productivity reaches a peak, companies have to start hiring again. So even as economists are cutting their economic growth forecasts across the board, businesses are signaling they still plan on hiring.

One of those businesses is BT Conferencing, a video and online conferencing unit of global telecom BT Group (BT), which is increasing its U.S. staff by about 10% over the next two months at its conferencing centers in Quincy, Mass., Chesapeake, Va., and Westminster, Colo.

"In the past year we focused on productivity gains, streamlining and some technology enhancements," said Ron Pasquale, head of US services for the firm. "At this point, we've harvested all those improvements. We're at point now where we have to start hiring."

Some employers who are hiring staff say they're worried about rising costs and other economic obstacles, but they still have to move ahead with hiring plans.

La Dove, a Miami Lakes, Fla.-based maker of hair care products, is increasing its 150-person staff by about 10%, even as it struggles with higher raw material costs.

"The percentage price increases are the highest I've seen in my whole career," said Mike Bass, executive vice president of the company. "A lot of our raw materials start with oil. And everyone has some kind of fuel surcharge on shipments. We can't raise our prices to cover these raw material costs," he said.

But the demand for products from hair salons that make up his customer base is so strong that he has no choice but to go ahead with the hiring.

"In this business, we have to get the product done and meet the launch date," he said. "If we weren't hiring, we would probably have to work a lot of overtime."

Lots of companies are facing those same problems. The number of employers who have more employees than they did the previous month has been steadily gaining, according to the Institute of Supply Management's surveys of executives. A third of manufacturing executives report increased staffing, while 22% of service sector executives are bringing on more workers to the industries that produce most of the nation's jobs. Both readings are very high by historic standards.

Jonas Prising, president of the Americas for job placement firm ManpowerGroup (MAN, Fortune 500), said that despite economic headwinds like rising oil and raw material prices and continued weakness in housing, he's finding much more confidence from clients about their hiring plan this year compared to a year ago.

"Last year at this time there was a higher degree of uncertainty," he said. "At those early stages of a recovery, hiring kind of sputters; it's uneven in terms of industries and geography. Now the signs of improvement are more evident, and steadily improving."

No one is ready to pronounce the labor market recovered from the damage of the recession -- not with unemployment still near 9% and total employment still more than 7 million jobs below where it stood when the recession started. But Prising and other experts said there are definite signs of improvement beyond the numbers.

"We're seeing candidates receive multiple offers," he said. "That means companies are interested in good talent. It's been a while since we've seen the situation where candidates are saying, 'No, thank you, I have another offer.'" To top of page

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