May continues to be tough going in the IT services space ... with clients still very nervous to invest in projects prior to a sustained recovery becoming evident. We are also still seeing clients implement cost saving initiatives while the market is still depressed. We are still a long way from the pace of activity this time last year, but the general optimism is up from a couple of months ago.
The month of May at Eagle saw a small increase in orders in Toronto, Ottawa and Montreal but orders continue to be very low out West (despite the price of oil). The influx of resumes into our system continues to be high indicating that there is still a surplus in supply of IT resources (at a macro level). There are always pockets of "in demand" skills within specific geographies but currently even these are few and far between.
The orders that we are seeing are primarily for contract or temporary employees, and there is little appetite for hiring full time resources, although Toronto has seen a small increase in perm orders lately. This can be borne out in the Search and Placement industry in general which has been severely affected in this recession, with no recovery yet.
The following are indicators as of time of writing:
> The price of oil was in the $68 range ... over $60 for a month now I would expect to see some positive reaction from the oil and gas sector.
> The TSX is in the 10,500 range and has been over 10,000 for a while ... a positive sign.
> The Canadian dollar is strong, close to 90c US. This is a positive indicator but can also serve to lengthen a recession.
> Prime is at 2.25%, and expected to remain there, making borrowing inexpensive. This is good for when companies feel optimistic enough to invest!
> Ottawa has had its share of issues that have slowed procurement, now it looks like Ontario's eHealth initiative is coming under scrutiny which may slow spending in one of the few hot sectors on the province.
> Unemployment is still bad ... Ontario lost another 60,000 jobs in May. Eagle is still seeing a fairly large influx of resumes of candidates looking for work.
> There have been few signs that any "stimulus" package will bring relief in the IT services sector. Hardware companies are benefiting from tax breaks but no big new IT services spending yet!
Very little change month over month from April ... except perhaps a slight increase in activity in the GTA (Greater Toronto Area) and National Capital Region (NCR). Much of the optimism has come in the form of planning and talk about upcoming initiatives, but little has translated into real jobs yet. With the Summer holiday months fast approaching we are hoping for action sooner rather than later ... but it may well be the Fall now before we see measurable recovery.