LOS ANGELES (AdAge.com) -- Ad-industry employment has increased for the first time in a year, a hopeful sign of recovery following a deep recession. But there is reason to be cautious as there could be more job cuts ahead.
First, the good news: The U.S. ad industry -- advertising, marketing services, media -- added 800 jobs in September, the first gain since October 2008, according to Ad Age DataCenter's analysis of Bureau of Labor Statistics data. The ad industry's media sectors added 3,000 jobs, the first increase in media employment since February 2008 (shortly after the recession's December 2007 start).
The embattled newspaper sector in September saw its first monthly increase (900 jobs) since November 2007. Cable TV, a bright spot for media during this recession, had its biggest monthly employment increase (1,800 jobs) since 2006. Advertising and marketing-services sectors -- agencies, marketing consulting and other disciplines -- cut 2,200 jobs in September, giving the ad industry a net gain of 800 positions. (See detailed figures on ad-industry employment at AdAge.com/adjobs.)
Economists generally believe the recession ended in third-quarter 2009, when gross domestic product grew -- at an annualized rate of 3.5% -- for the first time since second-quarter 2008.
Job market still contracting
Now the bad news. The economy is growing, but the overall U.S. job market continues to contract, with employers reluctant to staff up until they see more proof of sustainable recovery. The pace of job cuts is shrinking, but each month more people get fired than hired. The U.S. unemployment rate reached 10.2% in October, the highest since 1983.
Economists surveyed by Bloomberg expect unemployment to remain above 10% for the first two quarters of next year and to average 9.9% for 2010 (up from an annualized 9.3% in 2009). That would be the highest annual unemployment rate since 1941, according to BLS data.
And ad-industry employment remains far below pre-recession levels. The industry has cut 188,700 jobs -- 11.4% of positions -- since the start of the recession. Media employment, including TV, radio, newspapers, magazines and internet media, has dropped by 112,700 (12.8% of jobs) since December 2007. The industry has eliminated 76,000 jobs (9.8% of positions) in advertising/marketing services since the recession began. Industry employment is above pre-recession levels in only one category: internet media companies/web-search portals, where staffing has increased by 5,700 jobs (7.4% of positions) since the recession began.
What to make of the slight uptick in September ad jobs? First, the increase is based on the government's preliminary job data, subject to revision. Second, there is a good chance ad employment has not yet hit bottom.
Slow recovery ahead
The overall economy continues to shed jobs; it's hard to see why advertising and media would be immune. That's especially true for sectors in the midst of wrenching change. Newspapers, for example, have cut 69,000 jobs -- 20% of employees -- since the start of recession, but newspapers' economic challenges would suggest that more cutbacks are possible.
The record of recent recessions suggests that ad employment will be slow to recover. Employment in advertising and related services didn't bottom out until 11 months after the end of the 1990-91 recession. The last recession ended in November 2001, but ad employment didn't hit bottom until January 2004 -- 26 months later.
While the recent recession likely ended in third-quarter 2009, history suggests that ad employment won't reach its nadir until 2010 or even 2011.
It's encouraging to see the ad business score job gains in September. But it seems premature to say ad employment has hit bottom.
