Recent analyst and magazine reports (Gartner and The Economist, among others) have started to see some improvements in basic market fundamentals, including manufacturing activity. As manufacturers start exhausting inventory and forecasting increased sales, they will usually depend on overtime to ramp up production before hiring new employees for as long as they can. Recent indicators appear to show that things are approaching this tipping point in the US and Canada, and heading that way in Europe, which is indeed a uniformly positive sign of a real and possibly even sustainable market upturn.
Ultimately, an increase in manufacturing production — and hiring — stimulates the whole economy, which is why manufacturing (also known as industrial production, when the Fed reports it monthly figures for the total output of mines and factories in the USA) is considered a “leading economic indicator.” In other worlds because industrial production prefigures where the whole economy is headed, when manufacturing jobs start picking up it’s just a matter of time before jobs in other sectors, including IT, also do likewise.
The $64 billion question for this blog is, of course, “How much time before hiring picks up in general, and in IT in particular?” It might be as short as half a year to a full year before the coming bump in industrial hiring ripples out to the economy as a whole (that’s the time range for recent recessions from the 1980s forward to the last decade), but it could be even longer.
Though things now show signs that an upturn is coming, we still have to wait to see when that might happen, and how strong (and sustained) it will be. Stay tuned!