Market Report: Optimism and Employment Costs

by Jonathan McGaha | 9 February 2014 12:00 am

The metal construction industry is dominated by small businesses, and much of our economic vitality in the country and our industry depends on the success of those businesses. That is both from an owner’s and an employee’s perspective. Owners who don’t feel optimistic about the future will keep a tight grip on costs and be wary of investment.

For almost every business and certainly for those in the construction industry, employment costs are one of the major line items on a spreadsheet if not the biggest one. That conservative approach shows in little change in employment costs over several quarters.

The National Federation of Independent Business (NFIB) tracks the overall optimism of small business owners who are members and reports on it monthly. The index comprises reports on employment, capital markets, sales, inventories, wages, etc. Throughout 2012, the overall optimism trended down, taking a steep fall after the presidential election in November 2012.

The 2013 NFIB Small Business Optimism report for 2013 was a clear trend upward, but even by December the response was below the pre-recession levels of 100. Even an uptick at the end of the year can’t mask the volatility that occurred around the federal government shutdown in late fall.

The Bureau of Labor Statistics tracks total employment compensation, which includes wages, salaries and benefits. The quarterly report shows the overall percentage change in that cost. For 2013 the wage component was especially weak and only the benefit side affected much of the change. If the economy ticks up rapidly, this cost index is something to watch closely. Economists are also particularly interested in how the Affordable Care Act may affect the benefits component.

Source URL: https://www.metalconstructionnews.com/articles/market-report-optimism-and-employment-costs/

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