A recent economic report shows that business productivity is up in recent months.  While on the surface this seems like good news, it can actually be a bit of a hindrance for job seekers.

Due to the struggling economy, employers have learned to trim their workforce to the bare minimum needed to keep producing.  Employers have pushed hard to gain the most efficiency out of their workforce and the results are very telling – productivity increased at its highest rate in six years.

“Survival meant cutting costs as rapidly as possible and fulfilling orders with the fewest number of workers,” said Joel Naroff, chief economist at Naroff Economic Advisors.

While increased productivity is a good sign, it’s not so good for job hunters. Until productivity grows to a point where employers cannot sustain the pace with their current workforce, they will most likely not hire.

But stagnant job growth won’t last forever.  As the economy continues to improve, companies will get to a point where they will need to expand their workforce if they want to stay profitable.  Some say companies will begin reaching that point around the beginning of 2010.

“We believe businesses will have to start to increase hours worked and payrolls around the turn of the year since they cannot expect their current work force to sustain such rapid productivity growth,” said Michelle Meyer, economist at Barclays Capital.

Many companies are seeing a slight rise in business but are feeling hesitant to add to their workforce until things really start turning around.  Fein Tool North America president, Ralph Hards, echoed this to the Associated Press “If I see signs of recovery, I am going to hire back, but I am going to be very prudent,” he said.

Our Take:
As the days go by, more and more little bits of information leak out that show that the economy is turning around.  While this may not be the ray of sunshine that job hunters were hoping for, it is still an indicator of positive movement in the economy, which will eventually translate into more job openings.

Employers will need to continue to increase their productivity as the economy grows and to do that, new jobs will be added to the workforce.  Hopefully for all unemployed, that will be sooner than later.