by Megan Jewell
As we begin the New Year with our many resolutions and ideas of how we would like this year to differ from 2005, we must take a look at the economic forecasts for 2006. Some would say that it would be hard to predict anything in an economy that has been fluctuating so grossly over the last six months. However, there are indicators, especially from the last quarter, that indicate where some industry sectors may be headed in this New Year.
According to news analyst Peter Coy, the following sketches indicate how 2006 may impact businesses and workers.
– Shifts in the economy will continue to benefit highly educated workers at the expense of less-educated ones, who are more vulnerable to automation and competition from cheap foreign labor. Management consultants, architects, engineers, and the like ought to do well.
– Employment and pay in high tech could accelerate in ’06 as business finally gets over the bursting of the late ’90s tech bubble.
– Health care should stay strong, with good demand for doctors and nurses.
– Construction is likely to remain one of the healthiest of the blue-collar employers, although the action is likely to shift from single-family homes to office and industrial buildings.
– Manufacturing will be mixed: some sectors, such as tech, should benefit from rising business investment. But others, including motor vehicles, are likely to stay soft.
A closer look at a few of these sectors shows some interestingly hopeful outlooks. According to Business Week , growth for some sectors looks promising-though that’s growth in an economy where the only predictable thing is that things can’t be predicted.
Management and consulting services are expected to grow quite a bit as companies focus more on their core business and out-source the “non-critical” work to consulting and managing firms. This does not mean automatic out-sourcing to foreign companies; there has been significant growth in this sector within the U.S. (growth from 2004-2005 was at 4.9%) and the expectation is for this trend to continue through 2006.
Telecom is another hopeful area as services like WiFi bring back the demand that was there in the early 90’s. Employment trends have picked up quite a lot, with 5% growth in the industry. Look for this sector to be on the rise in early 2006.
Engineering and architectural services are predicted to do quite well this year, due to the predicted up-swing of office and industrial building construction. The employment percentage rose 4.7% from ’04-’05, and may see similar growth in ’06.
The same trend in non-residential construction will create more employment for construction workers, whose employment went up 1.8% from ’04-’05.
Oil field and mining support services is another sector that has seen tremendous growth from 2004-2005, with 15.6% employment growth. Companies like Schlumberger are hiring employees left and right and this trend is predicted to continue down a momentum-building path.
Physician offices will not be seeing a slowdown in the predictable future. The aging population of America is ensuring plenty of work for nurses, doctors, and specialists alike. This should bring the employment growth up from the already climbing 3.4%. This also means that support manufacturing for medical devices should also expect to see an upswing in employment and growth over the next year as demand for tools and new devices increases.
The temporary workers sector will also see growth; some debate whether this is a good or bad thing. However, with the unemployment rate predicted to hold around 5% for 2006, it looks like another year of around 5.3% growth for employees in this field.
Sectors predicted to slow down should not be surprising if you look at the trends from 2004-2005.
The motor vehicle and parts manufacturing industries will be dealing with another excruciating year in 2006. From November 2004-November 2005, employment has dropped 2.3%.
Dealers for those cars and parts will automatically experience a slowdown as the buying demand for vehicles declines as predicted. This sector is predicted to fare better than the manufacturers themselves, however. The employment change seen in this sector was not as bad as that for their “big brother” with a low -.4%.
As for residential contractors, they too will be experiencing a slowdown as overbuilding and higher mortgage rates slow the housing market. The increase in employment in 2006 is not expected to be as high as the 5.6% from ’04-’05. Similarly, real estate is not expected to repeat its 3.7% employment growth from ’04-’05.
These are all predictions, which may hold water if all other factors are equal. But even with unpredictable economic changes, they can serve as good indicators of which sectors are likely to experience improvements and where to get in the game. It also allows you to pay some extra attention to local companies in predicted declining sectors to see what can be done to help ease their struggles and keep them from off-shoring, laying-off, or closing down their facilities completely.
Sources: Coy, Peter. “More Jobs and Better Pay in 2006“. www.businessweek.com . © 2005.