A recent USA Today article provides some potential good news for the economy and hiring. It reports that companies are increasing their capital spending, begging the question: Are jobs far behind?
According to the article, spending on equipment and computer software incresased by 21.9 percent in the second quarter of this year as compared to the first. And a Corporate Executive Board survey of 400 companies revealed that 51 percent of those companies plan to boost their capital spending in the next 12 months. FoxHire also noted this trend in a blog post last month where we reported that many companies are finding they can no longer put off computer upgrades and are investing more in Information Technology as a result.
So what does this mean for hiring? Well, traditionally, increase in hiring does follow a surge in capital spending because companies need people to run new machines, and the suppliers that benefit from these equipment shopping sprees need to increase headcount to handle the demand.
But nothing has been normal in this most recent recession or ensuing recovery, and many companies may simply be making these investments to increase efficiency without adding bodies. Or, as we blogged in regards to the recent computer upgrade surge, many others will turn to contract staffing to handle those upgrades so they don’t have to increase their headcount while the economy is still shaky.