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CFOs predict 'virtually jobless' recovery in 2010

Posted March 3, 2010

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— If you are out of work or soon will be or seeking a new job, chances are you may be in for a long wait.

Chief financial officers say their firms are planning only “modest” hiring this year and add that companies will continue to outsource jobs, according to the latest quarterly Duke University-CFO Magazine Global Business Outlook Survey.

Job prospects remain grim, even though CFOs say expect “strong growth” in both business spending and earnings.

The survey, which wrapped up Feb. 26, included 1,400 CFOs from global private and public firms.

Looming over CFO concerns is the continuation of tight credit markets that could help drive the economy back into recession.

“In 2009, credit contracted at a record pace for the post-war period,” Campbell Harvey, founding director of the survey and an international business professor at Duke's Fuqua School of Business, said in a statement. “CFOs are telling us the credit crunch has not abated. Seventy percent of CFOs of small and mid-sized businesses say credit conditions are worse or much worse compared with 2007.

“This explains why businesses have forecast a trivial 0.2 percent growth in employment for 2010, which will lead to no meaningful change in the unemployment rate,” Harvey said. “It is hard to run the economic engine without any financial lubricant. This prolonged financial crunch poses a real risk of sending us into a double-dip recession.”

About half of the CFOs surveyed say they expect to add full-time workers, but the net increase is expected to be a minuscule 0.2 percent.

Temporary employment will only increase by 0.5 percent, and a 4 percent increase is forecast for outsourcing.

Most companies don’t expect to return to pre-recession employment numbers before 2012.

“Certainly, it is good news that the employment bleeding has stopped,” John Graham, professor of finance at Fuqua and director of the survey, said in a statement. “CFOs, however, still expect a virtually jobless recovery in 2010.

“Looking further ahead, it will be two to three years, maybe longer, before employment returns to pre-recession levels at most firms,” Graham said. “CFOs say they are keeping work forces low due to weak consumer demand and increased efficiency in their production processes.”

CFOs surveyed predict a 5 percent growth in jobs across Asia but expect a 1 percent decline in Europe.

Other key highlights of the survey include:

• Earnings are expected to “soar” 12 to 14 percent

• Capital spending will increase between 9-12 percent

Kate O’Sullivan, senior editor at CFO Magazine, noted that the capital spending jump is the biggest since 2003.

“However, to put this in perspective, the increased business spending follows years of belt-tightening and is therefore growth from a relatively low starting point,” O'Sullivan said in a statement.

• Research and development and tech spending will climb 4 percent

• Inventories will decrease at about half of U.S. firms

Graham warned that, if hiring doesn’t improve, the recovery from the recession is at risk.

“The uptick in business spending indicates the economy has bottomed out,” he said. “But the recovery might be short-lived if the employment picture does not begin to improve.”

Major concerns of CFOs are topped by:

• “Weak” consumer demand

• Federal government policies

• Price “pressures”

• Credit markets

Top concerns for their own companies include:

• Maintaining profit margins

• “Low” employee morale

• Liquidity management

Overall, U.S. CFOs have regained some optimism. However, the most optimistic CFOs are at Asian firms.

54 Comments

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  • atozca Mar 3, 2010

    We have been out of work so long, feels like we've retired. I pray that we can find work soon. I'm too old to keep living on the edge!

  • T-3485 Mar 3, 2010

    Chance, that is really hard to believe.

  • mtnmama Mar 3, 2010

    To, "chance," who has been trying to hire for a management position for 2 months but can't get anyone to come for an interview....Really? Pulease! You must be posting on Craigslist and your ad looks so bogus that no one will touch it, OR you are simply content to complain. Having been out there competing for what few jobs that are available, I know first hand that people are clamoring for interviews, so I don't buy your story for a NY minute! Every interview I had, I was told that there had been anywhere from 200 to over 450 applications for each position. With that type of response, something must be awry on YOUR end.

    BTW-Our Sen. Burr voted "NAY" on the extension. Kay Hagan voted "YEA"....for you that keep track of these things come next election.

  • prn13norm Mar 3, 2010

    A "jobless recovery" ain't no recovery!

  • JaySee Mar 3, 2010

    I would like to see this too:

    "If you outsource American Jobs you cannot bid on American government contracts".

    I bet it wouldn't do anything. The growth is outside the U.S. That is why they go. Growth in the U.S. is stagnant. I don't see our budget busting government throwing enough work toward our outsourcing companies that would keep them employing Americans. Of course there are foreign companies employing lots of Americans so it only makes sense that the policy goes both ways, eh?

  • Kingfish Mar 3, 2010

    I wonder if I can outsource paying my taxes? Maybe we can outsource for President...oh wait...we already have.
    Isn't NAFTA a wonderful thing?!?!?!

  • chance Mar 3, 2010

    Sadly, I have been trying to hire for a management position for 2 months now and can't seem to get any qualified candidates. Those who have experience send their resumes but won't come for an interview. Maybe people are just comfortable as long as they keep extending unemployment benefits.

  • DeadSquirrel Mar 3, 2010

    i work for a company that outsources jobs, lots of jobs and lower pay is not the biggest reason. the current reason is that most of its money is made outside of the US. If it brings the money into the US, it pays taxes. So it leaves its money outside and uses it the pay people that work outside. Sometimes it doesn't work and that piece of corporate pie moves back to the US or it moves to Singapore. The labor rates there are lower than India. Until they make more money in US, they will keep offshoring. Is it good for the US, no. Is it fair to the US employees, no. Is there anything you can do about it, unknown. I do not shop at Wal-mart or Target, I shop at Lowes and Home Depot only when the local hardware store does not have the item I am looking for. It's not hard, you just have to make the effort.

  • justabovewater Mar 3, 2010

    I would like to see some politician State or Fed stand up and tell companies "If you outsource American Jobs you cannot bid on American government contracts".

    Well said, Viking.

  • kellyaustin96 Mar 3, 2010

    BTW how is that change working out for you, the moderate independents that voted for Obama? But do not worry Obama has your best interests at heart, he is pushing through that healthcare bill which will increase taxes and create more unemployment.

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