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Local Tech Wire
DURHAM, N.C. – 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 and CFO Magazine
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,” explained Campbell Harvey, founding director of the survey and international business professor at Fuqua. “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.
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,” he warned. “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.”
Some half of CFOs say they expect to add full-time workers – but the net increase is expected to be a miniscule 0.2 percent.
Temporary employment will only increase by 0.5 percent.
Meanwhile, 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,” said John Graham, professor of finance at Duke’s Fuqua School of Business and director of the survey, 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,” he added. “CFOs say they are keeping workforces low due to weak consumer demand and increased efficiency in their production processes.”
CFOs 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,” she added.
• 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 then 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.