The latest IQNdex data from Q2 2011 suggests a healthy general contingent labor market in North America, despite questionable economic uncertainty and broader non-strength -- I know, curious word choice -- in the full-time hiring market. In fact, I would argue that the data probably suggests a healthier outlook for the broader economy than other indicators like recent PMI and GDP numbers. Overall, the IQNdex is up 8% on an annualized basis with "increases in all regions and all job sectors," according IQNavigator's report. The area with the greatest inflationary price pressure is the professional and managerial sector, with job titles in business development, financial reporting and compliance rising the fastest. The Northeast is the hottest contingent job market -- again, based on wage rate trends -- while the Midwest and South have cooled, even though both of the latter regions are also experiencing growth. The slowdown in manufacturing growth as evidenced by still growing (but growing at a slower clip) PMI numbers is also echoed in the contingent workforce; IQNavigator suggests that light industrial rates "slowed significantly" in May and June following a solid increase in March and April.
John Martin, IQNavigator's Chief Operating Officer, suggested that while the wage trends are increasing overall, we need to be careful about analyzing the sustainability of the momentum. Even more important, it's essential to dig into the numbers a step further and examine some of the inputs driving wage inflation. While there was "not a huge amount of hiring in the temporary workforce in the April/May," as John suggests, something was definitely sustaining upward wage inflation. Was it general momentum? Were higher skilled jobs in demand and skilled contingent labor scarce?
John says that heading into the second half of 2011, it will be important to consider whether wage rates will keep rising for intermediate and lesser skilled roles amidst a general hiring cooling. Monitoring the Bureau of Labor Statistics Numbers will be essential here, as will unemployment numbers and general and leading economic indicators -- consumer spending, GDP growth, unemployment, PMI, etc. Still, you can't dispute the 8% annualized growth that IQNdex reports for the first half of 2011 even if it tapers off in the second half of the year -- which historical trending suggests it will, even apart from the overall cooling economy.
After all, as John notes, "wages are inherently inflationary and typically rise 2-3% higher than goods on average." Getting "back to normal is one thing" after the recession, "but then the numbers should fall back in line" again. In other words, plan for that 2-3% wage growth on top of the 1-3% inflationary numbers. For the contingent workforce, it's important not to read too much into the aggregate information, however. It's critical to examine the data based on category and region.
Stay tuned as we examine this information in more detail (including general IT contingent wage trends for different types of roles). We'll also offer our own analysis of how procurement organizations can leverage this information in their sourcing and supplier management strategies.