(October 27, 2003) - One quick look at the following graph will tell you why the economy still feels bleak. During 2003, the number of 'job openings', as described by hiring authorities, is running significantly below both previous years. Roughly equivalent to the Conference Board's Classified Advertising Index (we wonder why you never hear about that any more), the BLS index of job openings was significantly lower during the first half of 2003.

Forecasts are very funny things. The basic statistical techniques give you the freedom to make whatever underlying case you choose to defend. Documented openings appear to follow the general trend towards less hiring during the fourth calendar quarter. Assuming that openings will follow the pattern of the last couple years, the forecast in the next graph is a reasonable portrayal of Job Board futures in 2003.

As you can see, we can conservatively predict that gross Job Board revenues (a pure function of openings) could decline to 50% of 2001 levels in the fourth quarter of this year. The tendency to hire without ever describing the job as 'open' appears to be taking on momentum this year.

The opposite is true in the actual hiring process. Actual hiring is beginning to regularly approach 2001 levels as the next graph shows. With any luck, the steep fourth quarter changes in hiring in the past two years, aggravated by September and October disruptions, will not repeat themselves.

We have some confidence that hiring will continue to increase, beyond 2001 levels, in the final quarter. Our fourth quarter expectations assume freedom from disaster.

The underlying message of these four graphs is pretty powerful. For some set of reasons, the very functions that our industry supports have become dislocated. The fact that openings and hirings are so discrepant could have a range of causes:

• Hiring authority has moved away from the HR managers who are polled in the BLS survey;
• Job Boards work so well that openings needn't be declared (the downside of the resume glut);
• Openings mean more work so the numbers are being sandbagged across the economy;
• Recruiting cuts, which went well beyond the 20% decline in hiring, are seriously effecting workflow;
• ATS products, which are the source of the number of openings, simply t report effectively;
• Recruitment advertising budgets have become so politicized that any reference to 'openings' must be extremely conservatively stated to manage the budget.

From here, the questions are getting clearer. The answers are not. Rest assured that we will continue to monitor these factors and keep you informed.

John Sumser

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