Semper International Q1 Industry Survey Reveals Major Industry Trends

BOSTON—February 2, 2016—Every quarter, Semper International surveys the industry to find out the major economic trends in profits, sales, capital investments and staffing. Here are some of the highlights from the report.

Key Insight #1—Rising labor costs, plus slowing demand equals...Will we slow or not?
When looking at rising labor costs, please keep in mind that this data lives in the past tense—it's a lagging indicator—and does not reflect the current economic state or near-term future.

Still, we can find trending data here, which can help us anticipate future economic machinations. When asked about the most dominant labor cost increases at the end of 2015, three major factors rise to the forefront:

• Healthcare Costs: 38 Percent
• Overtime: 21 Percent
• Base Pay 16 Percent

As we mentioned last quarter, concerns over health insurance costs rose slightly this quarter, as most renewals happen in January and July, and these cost concerns take preeminence at these times of year.

Note that any time labor cost increases, firms start to look at reducing headcounts and increasing perperson
productivity—particularly during times of depressed profits. These rising costs are likely why we saw such a sharp increase in staffing reduction plans this survey.

So, will demand slow or not? At this point it's a coin toss, but the odds of a contraction happening is rising.

Largest Labor Cost Concerns (Click on image to enlarge)

Key Insight #2—Two-week trailing sales decline
In the third quarter of 2015, two-week trailing sales data was one of the bright spots, rising 29 percent. Today, we find that uptick losing all the prior quarter's gains and then some.

By brass tacks, firms experiencing increased recent sales dropped from 42 percent to 28 percent, while companies
seeing sales stay the same grew from 36 percent to 45 percent of those responding. Finally, we see an 11 percent increase in companies reporting a decrease in sales at the end of 2015.

One final factor to consider in this data: seasonality. With the end of the holiday season, this particular question can be impacted.

Sales Changes in the Past Two Weeks (Click on image to enlarge)

* Question: With companies reporting signs of economic unrest, we wonder: Do we have the classic formula for "stagflation?"

Key Insight #3—Profitability is Job No. 1
For the second quarter in a row, maintaining profitability and keeping staff productive is the Number One concern facing respondents in this question.

This is probably not surprising given our survey data above. With demand slowing, global dysfunction, the Fed manipulations and the rapid appreciation of the dollar (and subsequent falling of asset prices), it's no wonder that the previous quarter was a challenge.

Largest Staffing Challenges (Click on image to enlarge)

* Question: What is your biggest staffing challenge?

Key Insight #4—Profitability Declines
The last insight in our report brings with it another taste of bad news, with only 70 percent of firms reporting profits for the last quarter of 2015.

Put in context, this is a return to the profitability dip we witnessed last year, which had rebounded by the second quarter of 2015 back above 84 percent. Unfortunately, the fourth quarter saw profitability levels dropped brought back down to the levels we saw over a year ago.

Unfortunately the earnings recession mentioned above seems to be reflected in our industry numbers as well. If we were being graded in school, we would have dropped down from about a B+ to a C in the past six months.

Was Your Quarter Profitable? (Click on image to enlarge)

Click Here to View the Full Q1 2016 Report

About Semper International
Semper International is the nation’s largest and most trusted supplier of skilled staff for the print, pre-media, graphic and interactive media industry. In over 20 years of service we have placed more than 50,000 team members in roles from production technicians to experienced managers in flex, flex-to-hire and direct-hire positions.

Source: Semper International.