Are Reactions to January’s Slow Growth Applicable to the IT Industry?
Despite adding 113,000 jobs in January and reducing the unemployment rate to 6.6%, many are disappointed in the current economic state. Previous labor force predictions suggested that 2014 would be an excellent recovery year but it seems to be getting off on the wrong foot. Will this lackluster economic growth directly affect the Information Technology industry? The results are mixed.
CNNMoney was quick to point out that the job growth is improving from the bleak 75,000 new jobs added in December but this growth, “was far weaker than hoped. Economists had been expecting an addition of 178,000 jobs.” Many economists and business owners are blaming the disappointing numbers on widespread winter blizzards and the end of the holiday season.
IT is not listed as one of the industries to make excessive cuts in January, unlike retail and real estate which were two industries that suffered greatly in December as well. Post-holiday slumps were not the only seasonal blues sung by economists, many cited severe winter weather as a factor in slow economic growth.
Economists who are “looking at the glass half full and predict 2014 could turn out to be a solid year for the recovery are blaming this soft patch on the weather.” Cold fronts and blizzards have swept the nation and sent ice storms into the DFW area which were crippling for drivers which provided challenges for businesses, many of which have cancelled one or more work days in 2014 already.
Luckily, spring is just around the corner. Experts agree that hiring should pick up in the spring, even as early as March. Chris Williamson, chief economist at Markit, believes, “the hiring trend is likely to revive again”. Many IT businesses made 6 month or year long growth plans for 2014 and they intend to stick to their guns. This means that any lackluster economic trends in January should not be treated as panic-worthy.
The U.S. unemployment rate has reached its lowest in years and is continuing to decline. Julia Coronado, chief economist for BNP Paribas insists, “the U.S. economy is very stable, 2014 might not be a breakout year, but it’s not a disaster either.” The negativity and doubt brought about by December’s low growth is evaporating with the melting snow and the IT industry is expecting exponential growth throughout 2014.