Recession warning: Companies are growing cautious about holiday hiring plans
New York(CNN Business) Employers seem poised to pull back on the normal rush of seasonal hiring, which experts say is another warning bell for a possible recession.
"We've not seen the normal September uptick in companies posting for temporary help," said Julia Pollak, chief economist for ZipRecruiter. "Companies are hanging back and waiting to see what conditions hold."
The "conditions" refer to the state of the economy and consumer spending, both of which have held up relatively well. Unemployment remains low. Retail sales ticked up in August, as falling gas prices put more cash in household wallets.
But with food prices rising and the Federal Reserve hiking interest rates at a breathtaking pace, economists are growing concerned about how strong the holiday shopping season might be. And that has many retailers nervous about how much inventory -- and extra staff -- they should bring in for the season.
"We're certainly hearing caution and some level of concerns," said Jeff Hewitt, a partner at management consultant Kearney. "The more thoughtful companies are thinking about building in flexibility."
US Labor Department data shows that employment in the retail sector typically swells by 450,000 workers over the holiday shopping season, while warehousing and delivery adds 350,000 workers. Those are the primary drivers of the seasonal hiring surge.
Last year, Walmart (WMT), the nation's largest private sector employer with 1.3 million employees at its US stores, went all in on hiring, adding 150,000 mostly permanent employees to its payroll in the months leading up to the holidays. This year it's looking at adding 40,000 seasonal jobs instead.
The company stresses that this is not precise apples-to-apples comparison; last year's hiring was driven by the need to fill staffing gaps that many employers were dealing with as Covid surges.
"Last year, we needed to focus on hiring full-time associates to ensure our stores were adequately staffed for the holidays," said Walmart spokeperson Jimmy Carter. "This year, our staffing levels are stronger, therefore we only need seasonal associates to help through the holidays."
Walmart warned investors in August that it is seeing a shift of consumer spending away from household goods, clothing and electronics and more towards higher priced food and gasoline. It recently trimmed 200 jobs at its corporate offices, and cut prices on many of those nonessential goods to clear out inventory.
FedEx recently warned that a slowing global economy hurt the the level of shipments it handled in August and expects the slowdown to continue in the coming months, perhaps resulting in a global recession. At the same time, it announced a number of cost-cutting moves, including grounding planes and trimming staff hours. It has not announced a seasonal hiring target yet for this year
"We continue to hire for operational positions needed in certain locations," said spokesperson Caroline Moses Little. A year ago it was planning to hire 90,000 workers ahead of the holidays.
Some companies are keeping seasonal hiring plans about the same. FedEx rival UPS is looking to add 100,000 workers, as it did in 2021. Walmart rival Target is also matching last year's goal of hiring 100,000 seasonal workers, even though its earnings plunged 90% in the most recent quarter due to the shift in spending away from nonessential goods.
Overall, it's a much more cautious environment in bringing on seasonal workers said ZipRecruiter's Pollak.
"They're just being very conservative. Employers are preparing for an uncertain future by hanging back a bit," she said. Ahead of the pandemic in both 2018 and 2019 "they were making seasonal offers in August."
