After 12 months of steady growth, hiring in the Information Technology sector went flat in Q2. The S&P Technology index fell by 8% during the second quarter of 2010 as a result (NYSE:XLK).
The following graphs the number of new online job postings for IT workers in the United States, monthly:
15 months ago, there were 72,000 paid-for online job postings for IT workers in the United States (we exclude free sites like Craig's List). Online job postings for IT workers grew by about 2.4% a month on average for a full year – the equivalent of an additional 2,350 new job postings a month – before settling at the 102,000 mark in March. Since then, however, hiring for new IT workers has gone flat, and even fell by 1.7% in April.
Overall hiring is still half its pre-recession levels.
Stock markets have taken notice: since hitting a 52-week high of 24.08 in April, the S&P 500 Technology sector SPDR ETF sits at 22.19 today, a 7.8% drop (NYSE:XLK). This is a better result than a month ago (July 2), when the sector index stood at 20.29, a 15.7% drop relative to the April high. The pick-up in the sector index over the past month has been matched by a slight increase in June IT Hiring.
The following graph shows the number of online job postings for IT workers in the United States (using the Bureau of Labor Statistics Standard Occupational Classification system for "Computer Specialists") and the evolution of the S&P Technology index (NYSE:XLK).
More important, however, is the analysis of the yearly returns of the S&P Technology index and the yearly growth in Hiring Demand: equity analysts care about the future returns of an index, and yearly growth rate in Hiring Demand appropriately captures evolving temporal dynamics as well as having the advantage of being free of seasonal variation. Notice how the stock market index picked up about 6 months before hiring did – stock markets are usually forward-looking by about six months. Notice too how the slow-down in the Hiring Demand growth rate in February has caused returns of the S&P Technology sector index to lose steam. In other words, the stock markets may have gotten a little ahead of themselves, and the slow-down in hiring meant that aggressive forward-looking expectations were no longer sustainable.
The following table lists the Top 25 companies in terms of IT job postings over the past three months:
|Advertiser||Job Postings – May, June, July 2010|
|General Dynamics Information Technology||3,992|
|Booz Allen Hamilton||876|
|Agile Enterprise Solutions||578|