Seems as if corporations feel more cautious than the investors who have bid up their stocks lately, with companies content to conservatively bide their time sitting on loads of cash.
“Healthy profits, combined with opportunistic borrowing at very favorable market interest rates, are providing corporations with an ample cushion against the next business downturn,” Credit Suisse says, noting “the ratio of liquid assets to total assets on nonfinancial corporate balance sheets is hovering near a 45-year high.”
Big cash buffers are a manifestation of “the severe money demand shock American firms experienced in recent years,” the firm suggests. While that’s not good for long-term growth, it remains hard to get businesses “to risk even more of their precautionary holdings” on expansion, which could lift job growth.
The continuing decline in weekly jobless claims suggests employers have trimmed their workforces about as much as they can, but as Credit Suisse infers, they remain reluctant to expand or hire. Demand remains uneven, at best, and there’s clearly enough uncertainty related to the geopolitical picture and global growth to hold off on hiring, at least here in the US.
Here’s a recent story (hat tip to Michael Panzner at Financial Armageddon) that paints a still-bleak picture on the hiring front. The city of Taunton, Mass., cancelled its annual jobs fair…because of lack of jobs.
Story says the Taunton Employment Task Force cancelled the fair — for the first time in 30 years — because only 10 tables had been reserved for the fair, and the task-force chairman Richard Shafer said it takes 20-25 employers for a quality job fair. Of the 10 tables booked, one was reserved by the United Way offering help to job seekers (not jobs), and four spots reserved by temp agencies.
“I think what we’re seeing is the companies may be stabilized and are trying to justify putting additional folks on and are using temp-to-permament agencies,” Shafer told the Taunton Daily Gazette. “They’re not looking for permanent workers as much until they can be sure the improved work load will continue.”
Well said, Richard. March employment report due Friday, and economists currently expect a gain of about 200,000 jobs.
(Picture courtesy of the Library of Congress)