Business Services

Recession is easing, but is business services sector benefiting from recovery?

The longest recession in 70 years appears to be easing, barely two years into the crisis, as figures across sectors and geographies point to early signs of a recovery. In the U.S., the second quarter (Q2) data shows a 1% contraction in GDP, better than a 1.5% drop estimated by the analysts. It is the fourth consecutive quarterly decline, a record, but nonetheless shows vast improvement over the fall in preceding two quarters – 6.4% and 5.4%, the sharpest back-to-back declines in the last 50 years. Although there are signals of economic growth returning in the current quarter, there is no clear indication whether growth will bring an end to job cuts. Only last month, as Labor Department data shows, U.S. unemployment rate rose to 9.7%, the highest in 26 years, while non-farm payrolls dropped by another 217,000. Since December 2007, employment has fallen by 6.9 million.

The professional and business services industry, which grossly depends on the health of its client segments, is yet to give any clear signal about a recovery. This $450 billion industry, comprising of roughly 300,000 companies, has shed more than 1.5 million jobs since the start of the recession in December 2007. In August, the employment declined 22,000. The only silver lining is that average monthly decline in employment in the sector has dropped to 46,000 in May-August, 2009, from 138,000 during November 2008 to April 2009.