As the indications of hitting a cyclical turn multiply against the steady and alarming negative trend baseline background, there is more clarity on how what looks like an unrelenting slowdown had not yet morphed into the traditional recession setting (the “V”). For the most part, it appears as if the business or corporate sector has absorbed the negative pressures not just in the US but overseas including China. Undoubtedly the ease of funding and borrowing contributed to the reluctance to begin massive paring of resource utilization especially on the labor side. That was always the great danger of the “rising dollar” period and what it inevitably called for in terms of shifting out of “easy” funding.
The private firm China Beige Book has compiled the potential labor shift on the other side of the Pacific.
The most interesting finding of this quarter’s report is that the labor market is finally reflecting the weakness in the general economy. This hasn’t been the case throughout the slow-down, which started in the second quarter of 2014 according to the CBB data.
“Led by rising layoffs at private firms, first quarter job growth took another notable hit, sliding to a new four-year low. Expectations of future hiring have also taken a dive,” states the report. Only 23 percent of respondents said they were hiring, with 15 percent of companies said they are firing. China has announced it will lay off millions in the moribund steel and coal sectors of State Owned Enterprises (SOE). However, the CBB survey indicates it was mostly private companies which didn’t want to hire more workers.
What that suggests is more of the economic or cyclical turning point perhaps toward the more traditional recessionary circumstances:
The good news: Profit growth stabilized overall and didn’t further deteriorate compared to last quarter, although the report notes this may be due to cost cutting and layoffs.
