According to American companies, hiring is easier despite the low unemployment rate
Major U.S. employers, from fast-food chains to arms manufacturers, reported a dramatic improvement in hiring conditions even as official data showed unemployment was at its lowest level in decades.
Senior executives at several S&P 500 companies provided upbeat updates on the labor market in recent quarterly earnings reports. Their comments may reassure investors worried that a tight labor market threatens the Federal Reserve’s efforts to reduce inflation.
“Corporate commentary has differed significantly from previous quarters,” said Binky Chadha, chief global strategist at Deutsche Bank. “It may not be fully representative, but it’s still a very good part of the U.S. economy. . . that’s why I’m looking for the data [catch up] to what companies say and experience.”
Unexpectedly resilient jobs growth data released earlier this month sent stock and bond prices sharply lower as investors worried that rising wages would force the Fed to raise interest rates further.
But Christopher Nassetta, the chief executive of the Hilton hotel chain, epitomized the comments of the big group leaders when he told analysts this month that “we’re not quite back to where we were in terms of access to the workforce, but we’re getting awfully close.”
At many consumer businesses, such as Yum Brands, which owns the fast-food chains KFC and Taco Bell, labor shortages since the start of the coronavirus pandemic have not only increased costs but also hurt sales as some restaurants have struggled to maintain regular hours. .
But this month, Yum CEO David Gibbs said that “the number of apps and stores is growing. [are] will return to their pre-Covid opening hours. . . we love the environment we are in”.
Meanwhile, high street chains Starbucks and Chipotle have reported improvements in employee retention, which Frank Britt, Starbucks’ director of reinvention, says will reduce training costs and “help stabilize operations.”
The improvement was not limited to lower-paying industries such as restaurants and hotels. Boeing CEO David Calhoun, for example, told analysts that “we’ve had no problem hiring people” and said pressure on the supply chain has “relieved a lot”[d] up”.
Few companies said the challenges were completely gone — even after the recent improvement, one in 10 Chipotle restaurants remained tight, and some industries suffered from shortages of skilled workers, such as airline pilots.
Home Depot said this week it will spend an additional $1 billion this year to raise wages for store employees, and Russell Price, chief economist at financial services group Ameriprise Financial, said the pressure is likely to continue for smaller companies that pay lower wages. wages and benefits.
Still, he added, the optimism among larger groups is an “encouraging” sign.
“It’s a gradual improvement – not everyone will be back to normal at the same time, but you have to start with a handful. . . this should continue to expand as we move forward.”