February 2, 2018 – Employers added 200,000 jobs last month as the U.S. unemployment rate remained at a 17 year low of 4.1 percent, according to the most recent U.S. Bureau of Labor Statistics report. The January gain is the 88th consecutive month of job growth. The number of unemployed persons was essentially unchanged at 6.7 million. Analysts had predicted the job additions of about 180,000 jobs last month.
Most economists expect the Trump administration’s tax cuts to help speed the economy’s already decent pace of growth. Some envision the unemployment rate dropping as low as 3.5 percent by the end of 2018, according to the Associated Press.
“I hear my clients saying the tax bill gave them more confidence in the pro-business economy,” said Tom Gimbel, CEO of search firm LaSalle Network. “There’s confidence coming from D.C. that they’re not going to get in the way.”
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Where Job Growth Occurred
- Construction added 36,000 jobs in January, with most of the increase occurring among specialty trade contractors (+26,000). Employment in residential building construction continued to trend up over the month (+5,000). Over the year, construction employment has increased by 226,000.
- Employment in food services and drinking places continued to trend up in January (+31,000). The industry has added 255,000 jobs over the past 12 months.
- Employment in healthcare continued to trend up in January (+21,000), with a gain of 13,000 in hospitals. In 2017, healthcare added an average of 24,000 jobs per month.
- In January, employment in manufacturing remained on an upward trend (+15,000). Durable goods industries added 18,000 jobs. Manufacturing has added 186,000 jobs over the past 12 months.
- Employment in other major industries, including mining, wholesale trade, retail trade, transportation and warehousing, information, financial activities, professional and business services, and government, changed little over the month.
Recruiters Weigh In
“The tight job market has turned the advantage to the employee who are finally in the drivers’ seat and are seeing noticeable wage growth. A 4.1 percent unemployment rate will do that,” said Edward Batchelor, managing partner at Hardman Batchelor International. “This is even more pronounced at the executive levels where a shortage of key talent has resulted in us seeing top leadership candidates becoming more selective in the roles they will accept and growing bidding wars for specialized talents in areas like cyber security, artificial intelligence and international expansion expertise.”
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Given Hardman Batchelor’s focus on emerging market cities and providing diverse candidate pools as a staple of its executive search work, he said the search firm is feeling this pinch even more. “Firms that focus on the major cities are able to tap into a large labor pool. However, given our specialization in emerging cities our task has become very challenging with unemployment rates being so low and the increased retirements of the baby boomers.” He pointed to Denver, which is tackling an unemployment rate of 3.1 percent, which Mr. Batchelor said is even pronounced “given that 35 percent of the population is in the 18 to 34 year old age group in the Denver Boulder area.”
“The other trend we are seeing in executive search is an increase in confidential searches given the limited labor pool for many specialized roles,” he added. “Employers are paying a premium to smaller specialized firms like us that work more discreetly and below the radar. For example, one of our focused markets is Austin, which was voted the CNBC Top Metro Area in America to start a business and is one of the fastest growing cities in the country.” With a current war for talent in this market and an unemployment level of only 3.1 percent, he noted, “our discretion, deep knowledge of the market and the candidate pool has become more important.”
“Our outlook on hiring for 2018 is very bullish and will be a continuation of what we experienced in 2017,” said Matt Shore, president of Sunrise, FL-based executive search firm StevenDouglas. “We are in a candidate driven market and demand for highly skilled professionals from middle management to the C-suite is robust to say the least. Companies and private equity firms are experiencing longer time frames to fill critical positions and candidates are being extremely selective as to what opportunities they entertain,” he said.
“An additional challenge is the fact that many of these candidates are receiving multiple competing offers in a short timeframe and even when they accept one of those positions, their current employers are aggressively counter-offering them to stay,” Mr. Shore said. “Over the last year, we have seen many bidding wars over candidates and we have had clients turn to us after having had multiple turn downs on the same position.”
“Needless to say, this environment has been good for both our executive search and interim resources business and we are investing in new offices and hiring additional recruiters in existing markets to ensure that we execute and capitalize on this great market,” Mr. Shore says. “When search firms like ours are hiring aggressively, it is a great leading indicator of the upcoming year.”
“I’ve been recruiting for nearly 30 years, and rarely have I been as optimistic as I am right now about the coming year,” said Rob Tillman, founder of executive search firm TillmanCarlson. “Historically, recruiting activity has most closely tracked the consumer confidence index which is now at a 17-year high. With the stock market at all-time highs and tax cuts on the horizon, economic conditions should get even better in 2018,” he said. “While we may be entering the final stages of the economic recovery, the trends we see in the war for talent should become even more pronounced in 2018.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media