In search of some light at the end of the tunnel, I picked up the Manpower Employment Outlook Survey (MEOS) today.

If there was any sign of an increase in hiring, in any sector, the MEOS would surely pick it up, I thought. It is a well developed research instrument, with sufficient history to give context to any conclusions that they, or you, might make.

The result is a very mixed, if slightly optimistic picture. There is some relief for HR departments, but not a lot, and not now.

The report itself tells us that all 10 regions in China are anticipating positive hiring activity in Q1 2009, but in the Press Release the expectations are  more pessimistic, and start with the fact that the weakest hiring intentions are to be found in Shanghai, Beijing (below) and Guangzhou.

These are the main cities in China, so we should not take this lightly. This is where the big housing markets are, the location for Stock Exchange, and the final destination for hundreds of millions of people from the countryside. If these locations offer lower levels of opportunity, the flow of people into the city will slow down, thereby slowing things even more.

Hoping Against Hope

It is noteworthy that there are much more positive hiring expectations in cities in the West of China. This is seen by many as the way out for China, but the benefits will not kick in any time soon. If you compare the purchasing power, or the industrial base, of the main cities with that of the countryside, they simply don’t compare.

As of today, if the big cities slow down then everything slows down. And everything is slowing down. Foreign Direct Investment (FDI) is down 36%, as of today, and the recent Purchasing Managers Index (PMI) showed a reduction to 47.7. This is the third month in a row that it has shown a decline. Some people in your office have not worked long enough to remember a time when the China PMI was negative. For the past 10 years everything has been, go!, go!, go!.

The sector analysis is more optimistic. Employers in all six industry sectors forecast positive hiring activity in Q1 2009.  At the same time, a quick look at the MEOS charts shows you that sector expectations have been declining for some time now. In most cases there is a positive but declining slope for eight quarters, equivalent to two years, so the decline has been well signaled.

For most of the period in question the government appeared to believe, or at least wanted to project, that the slowdown was a temporary, single quarter issue. The population believed that the economy could not falter during an Olympic year. But the factories closed nonetheless.

Silver Lining

The good news is to be found in the fact that China is included in the group of countries who still have positive hiring sentiment. China is No. 1 in Asia, and about No. 7 in the world, and it is notable that the other countries with higher levels of hiring sentiment are relatively small countries.

This is probably little comfort to HR Managers who are currently facing hiring and travel freezes, or are even letting people go. It also doesn’t help Recruiters who are sitting on their hands, waiting for the hiring freeze to end. These Recruiters should be mapping their industry, but conversations with Recruiters tells me that few, if any, are doing this.

But the positive sentiment does hint at a resilience in the Chinese economy, and an ability to ride this downturn out. Reductions in administrative costs, taxes and other fees are on the way, along with a spending boom involved in the government’s RMB4 trillion infrastructure package.

Hope springs eternal. At least you don’t have to cope with Singapore’s problems …