Information Technology – XLK – Jobs. Trends. Insight.

IT Hiring Staggers in Q2 – Tech Stocks drop 8%

By Charles Thibault on July 30, 2010 in Computer/Math/IT, Information Technology - XLK.

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:

Source: WANTED Analytics - Hiring Demand Dashboard

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).

Source: WANTED Analytics, Google Finance

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.

Source: WANTED Analytics, Google Finance

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
Deloitte	4,098
General Dynamics Information Technology	3,992
Microsoft Corporation	2,680
Northrop Grumman	2,238
SPARTA Inc	1,818
Unitedhealth Group	1,579
IBM	1,523
SAIC	1,501
AT&T	1,404
HP	1,313
Amazon.com	1,290
Raytheon	1,274
ManTech International	1,178
Lockheed Martin	1,038
Booz Allen Hamilton	876
Emc Corporation	860
SRA International	836
GE Energy	814
BAE Systems	753
Kaiser Permanente	667
Dell	653
Google	602
Harris Corporation	601
Yahoo!	592
Agile Enterprise Solutions	578

Finance, Health Care, IT Stocks Lose Momentum as Hiring Slows

By Charles Thibault on February 2, 2010 in Business/Finance, Computer/Math/IT, Finance - XLF, Health Care, Health Care - XLV, Information Technology - XLK, S&P 500 - SPY.

Several stock market industry segments have taken hits over the past two or three weeks as the labor market situation deteriorated slightly during the second half of January.

Health Care stocks are down 2.9% over the last two weeks (XLV); Information Technologies stocks are down 9.5% over the last three weeks (XLK); and Finance stocks are down 7% over the last three weeks (XLF). The 4-week moving average of new unemployment insurance claims has gone up two weeks in a row.

Hiring in these three sectors – Finance, Health Care, and Information Technologies – has slowed in the past two weeks too, falling off the positive trend they started in September. What's worse, year-over-year hiring improvements have swung from positive to negative in these sectors.

The following analysis confirms a great Q4 in terms of GDP growth (+5.7% annualized), but also suggests that growth rates are slowing.

Let's first take a second to make sure we're not presenting conflicting information about the labor market situation, particularly compared to the Conference Board's Help Wanted Online series which uses the "same" data as we present here (HWOL). That series uses a "mid-month to mid-month" time-frame in order to match the BLS's sampling framework which measures national employment on the 14th day of each month. In early January, we did see some positive labor market signals. However, national Hiring Demand fell by 3.7% two weeks ago (after the HWOL sampling period closed). Since January 19th, the S&P 500 index has lost 4.3% too. This is after the S&P 500 gained 3.6% during the first couple of weeks of January on positive December UI claims data.

The following table compares year-over-year changes in sector Hiring Demand (the number of new online job ads) and weekly returns of sector Exchange Traded Fund (ETF). Sector ETFs are tradable securities which mimic the composition and returns of the different sector indices developed by Standard & Poor's. Sector indices are sub-components of the S&P 500.

Source: WANTED Analytics, Google Finance