U.S. Employers Hold Back on Spring Hiring

by Dennis Jacobe, Chief Economist

U.S. Job Creation Index at +14 in May, hardly changed from April

PRINCETON, NJ -- Gallup's Job Creation Index was at +14 in May. This is not much different from the +13 of April or the +12 of the previous two months. Job creation is now double the +7 of May 2010 but still trails the +21 of May 2008.

U.S. Job Creation Index, January-May, 2010-2011

While job creation in 2011 continues to exceed that of 2010, the improvement appears to be diminishing. In 2010, employers seemed to return to their usual pattern of hiring more workers in the spring than in the winter, a pattern they appeared unable or unwilling to maintain in the downturn years of 2008 and 2009. However, this has not continued in 2011. As a result, the year-over-year change in the index has declined in recent months. In turn, this suggests that job creation may be somewhat weaker than the raw index numbers indicate.

Hiring and Firing Relatively Little Changed in 2011

The Job Creation Index score of +14 in May is based on 32% of workers nationwide saying their employers are hiring and 18% saying their employers are letting workers go. Between 29% and 32% of employees in the first five months of 2011 said their companies are hiring employees and expanding their workforces, while between 18% and 19% said their employers are reducing staff size.

Hiring and Firing Nationwide, Monthly Averages, January 2008-May 2011

Job Market Conditions Improve Most in the West

Job market conditions are best in the Midwest at +17, followed by +15 in the South. Job conditions improved the most in the West in May, climbing to +12 from +9 in April and +2 in May 2010. Conditions in the East, at +13, are currently about the same as those in the West.

Map: U.S. Job Market Conditions, by Region, May 2011


Gallup's Job Creation Index confirms that many employers are holding on to their workers. The percentage of employers letting workers go is now within three to four percentage points of the early 2008 lows. On the other hand, hiring remains seven to eight points below early 2008. That is, current job creation has not returned to its levels of nearly 3 ½ years ago, when the recession got underway.

On an absolute basis, job creation in 2011 is better than it was over the same five months in 2009 and 2010. At the same time, new jobs are being created at an anemic pace compared with what is needed to lower the U.S. unemployment rate, and the rate of improvement this year compared with last is declining. These trends are consistent with Gallup's recent unemployment report showing there has been virtually no improvement in the current jobs situation year over year.

The government's most recent jobs report has many economists reducing their forecasts for the remainder of 2011. However, the real question may be whether the recent slowdown in the economy is already being reflected in the unemployment numbers or whether there will be a further deterioration in the unemployment rate. Gallup's unemployment data suggest that the drop in the government's unemployment rate below 9% earlier this year may be a result of the BLS seasonal adjustment process. If that is the case, it is possible that job market conditions were worse earlier this year than was generally perceived. In fact, it could be that the government's unemployment rate will get worse before it gets better.

While investors in May said their top worries were energy prices, the federal budget deficit, and the unemployment rate, unemployment may soon go from third to first on their list.

Survey Methods

For Gallup Daily tracking, Gallup interviews approximately 1,000 national adults, aged 18 and older, each day. The Gallup Job Creation Index results are based on a random sample of approximately 500 current full- and part-time employees each day.

National results for April are based on Gallup Daily tracking interviews with 17,191 employees conducted May 1-31, 2011. For this sample, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point. Regional results for May are based on interviews totaling more than 3,000 in each region. For each total regional sample, the maximum margin of sampling error is ±3 percentage points.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample includes a minimum quota of 400 cell phone respondents and 600 landline respondents per 1,000 national adults, with additional minimum quotas among landline respondents for gender within region. Landline telephone numbers are chosen at random among listed telephone numbers. Cell phone numbers are selected using random-digit-dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, and phone status (cell phone only/landline only/both, cell phone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2010 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more details on Gallup's polling methodology, visit

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