RALEIGH – A quarterly survey of tech leaders shows that North Carolina leaders are feeling more pessimistic about the tech sector than they were a quarter ago—and 19% of respondents reported that they have frozen hiring or pursued layoffs, furloughs, or pay reductions for workers.
That’s a significant change, as just 5.7% of companies that had frozen hiring as of the poll results released in April 2022. Now, the latest data shows that 17.5% of firms have frozen hiring and an additional 1.6% of firms have implemented or are currently considering layoffs, furloughs, or pay reductions.
“In the private sector, there is a lot more negativity,” said Dennis Stearns, the founder of Stearns Financial, which sponsors the poll, during Wednesday’s presentation. “Expectations that we’re in a recession, or that there’s a recession coming, are a lot higher.”
Is Triangle jobs market slowing? Number of openings remains volatile
Key takeaways from tech leaders
One key takeaway from this survey, according to NC TECH President and CEO Brooks Raiford, is that there has been a shift in how leaders are viewing the current state of the economy.
“There has definitely been a shift in some of the responses since the first two quarterly polls,” Raiford told WRAL TechWire in an interview. “Confidence in business growth over the coming quarter has declined by 20 points from the Q2 (April) poll.”
Tech leaders were asked about the expectations for the next quarter of their own business’ growth. In April 2022, 69.2% of respondents expected business to grow.
But now, the data shows that just 50.4% of tech leaders expect to grow their own business.
Screenshot of an NC TECH slide shared via Zoom webinar.
Shifting sentiment in tech sector
“There’s a bit of a shift,” said Raiford, in terms of the respondent’s sentiment about the second quarter of the year compared to the first. For example, the number of respondents that perceived the sector’s performance as “great” decreased by seven percentage points.
The April 2022 data release showed that 18.7% of respondents perceived that the first quarter of 2022 was “great” for North Carolina’s technology sector. But that dropped to 12.7% in the latest survey, according to the survey results released by NC TECH earlier today.
When leaders looked at their own businesses, the drop was even more significant. While 32.1% of leaders reported the first quarter had been “great” for their organization, in the latest data, just 19.8% reported the same.
Another point of note, according to Raiford: leaders remain concerned about the so-called Great Resignation, as well as ongoing concerns about supply chains, in forward-looking projections for their businesses.
Screenshot of an NC TECH slide sharing NC TECH survey data.
Job market and the economy
That’s amidst a turbulent and volatile job market, and an increasing number of announced and possible layoffs that could affect workers in North Carolina. And NC TECH also found that the number of technology job openings decreased by nearly 10% in June 2022 compared to May 2022, though more than 50,000 jobs in the IT sector were still open that month, according to the latest report from the organization.
“The report that came out recently with June data, did show a dip in IT job postings in May, but still up 41% compared to June of last year,” said Raiford. “Remains to be seen whether that is a trend, or a dip, and we do see changes in hiring in the summer, so it may be cyclical.”
June employment numbers, in the U.S. economy, were a “pleasant surprise,” said Raiford.
And later this week, the U.S. government will release data about GDP growth for the second quarter, noted Stearns, which could illuminate more about what’s happening in the U.S. economy and either relieve or exacerbate concerns about the future of the sector and future of the economy.
“We have the largest gap in the GIO, not the GDP, but the income piece of the equation,” said Stearns. “The largest gap up while GDP gap was down in the first quarter, and that plays well in the NC tech industry in where some of the strength is there.”
UNC professor: Drop in consumer confidence is nuanced – don’t overreact
Tech leaders more positive about own firms
Still, even as the survey responses show increased concerns about the overall economic environment and state of the labor market, said Raiford, “respondents continue to be more bullish about their own organizations than about the sector generally.”
“It’s worth noting that people felt better about their own organizations than the sector at large,” said Raiford during Wednesday’s presentation.
Part of what leaders are balancing, said Raiford, is the macroeconomic climate with inflation and the possible retirements of workers leading to workforce challenges, while they’re looking to address the ongoing labor needs through retention efforts as well as recruiting efforts, should they still be hiring.
“There is an interesting dichotomy between wanting to be cautious in hiring due to economic uncertainty,” said Raiford, while still looking to satisfy their existing employees.
More than 50% of companies who responded to the survey still expect their company to experience growth during this coming quarter, according to the results of the survey. But that’s changed dramatically since the last quarterly survey.
“Grow went down 20%,” said Raiford. “But they did not move into negative or into pessimistic territory.”
Advice for job seekers in changing labor market: Be careful, economists warn
Changing balance of power in tech sector?
The survey also revealed that the percentage of companies that are offering fully remote work has remained steady throughout 2022, but the percentage of employees who are actually working remotely appears to have declined in the most recent quarter.
“This may mean employees are gradually wanting to return to office,” said Raiford.
It could also mean that the uncertainty about the future of the economy and the labor market is shifting the balance of power in the workplace back towards employers.
“There is a signal that there may be a slowdown in hiring,” said Raiford. And that may mean that those North Carolinians who are pursuing new employment might be in a rapidly changing labor market.
“One clear recommendation is for job seekers,” Dr. Michael Walden, a Reynolds Distinguished Professor Emeritus at North Carolina State University, and a WRAL TechWire contributor, in an interview focused on advice for job seekers, as preliminary signs showed a growing turbulence in the Triangle’s job markets. “Don’t delay taking a job that’s offered. Even without a recession, the economy is likely to slow, so the volume of hiring will also be curtailed.”
And, earlier this month, it did appear that job postings had slowed, including in the state’s startup economy. But this week, some job boards are showing an increase in job postings from the prior weeks, though there have been more layoff announcements across the state’s economy from startups to Fortune 100 companies in July, and job postings are down month-over-month on many job postings.
Layoff Watch: Job cuts are beginning to mount across NC – here’s the latest
