IT Loses Jobs for First Time in 25 Months, Foote Partners Reports

It came as somewhat of a surprise to many that after 25 months of Bureau of Labor Statistics (BLS) reports showing IT job growth, September’s report “reveals a net loss of 1,700 jobs across four industry job segments commonly associated with IT professionals -- the first monthly decline since August 2010 ... not associated with a labor strike or similar temporary market anomaly.” That analysis, from Foote Partners LLC, includes news that “1,800 jobs were lost in Management and Technical Consulting Services following 17 consecutive months of job growth during which 95,400 jobs were added in this segment to the national economy (5,612 per month average).”

That wasn’t the only grim segment. In the Information industry job category, Telecommunications and Data Processing, Hosting and Related Services segments lost a total of 2,800 jobs in September adding to the 15,000 additional jobs lost in these segments between January to August of this year and 41,800 more lost in 2011.

The news was better in another industry segment in the same category (Professional and Technical Services) -- Computer Systems Design/Related Services -- jobs increased (by 2,900), extending the streak to 24 consecutive months.

Foote also highlights that 2,400 jobs were lost in Data Processing, Hosting and Related Services, “the largest single monthly decline in 40 consecutive BLS reports going back to June 2009.”

According to David Foote, CEO of the IT analyst firm:

I couldn’t help but expect the reaction to this month’s BLS employment report would be mainly political, with the presidential election just 31 days away. And sure enough that is what is dominating the news cycle. But for me it was the stunning sudden reversal in IT job expansion. Overall national employment numbers were disappointing July and August but for IT they were spectacular, the greatest monthly job gains in five years.

The company has been keeping a close eye on IT labor trends for over 15 years.

His report isn’t all doom and gloom; he’s optimistic about the future:

At the jobs level, I wouldn’t be surprised if this turned back around soon because the truth is that the many of the IT job segments in the government jobs reports, in particular those in IT services, have been on strong and sustained growth runs for nearly two years. There is absolutely no structural shift taking place to account for these September job losses; if it were structural you would see it playing out slowly over many months, not in one sudden market burp. The fact is that companies are actively searching for talent and hiring for the future, though with considerable selectivity. They are making investments in new people not simply filling gaps at the project level: They’re building for the future, putting a premium on versatility and multi-dimensionally skilled individuals who can grow and develop within the company culture.

Foote also points to economic uncertainty and the barrage of “tax cut” plans put forth in the U.S. presidential election. In addition,

...nearly three quarters of U.S. businesses are on a calendar fiscal year and they just entered into their 4th quarter starting October 1st. It’s perfectly normal for them to step back in September and recheck their budgets and hiring plans for the rest of the year and the beginning of the next fiscal year. This year we [are] noting two important differences in our interviews with CIOs and others responsible for IT hiring: employers were feeling the nervousness just described and consequently acting more deliberately, including placing temporarily freezes on IT job requisitions in September. We are now hearing that they have just lifted those freezes and they’re back to active searches on all requisitions.

So it appears this September reversal may have been a result of temporary suspension of hiring during the customary “step back and recheck our thinking” phase. Foote Partners expects a resumption in the October and November BLS employment reports of the overall robust hiring trend for IT professionals that our firm has been tracking in the BLS reports for two years running.

You can read more here.

Posted on 10/10/2012