The number of businesses expecting to hire new employees in the following three months began falling in summer 2007, a few months before the recession began. This makes sense, as it's a leading indicator. Fortunately, the measure recovered somewhat this summer, although it's still a negative territory.
Hiring is all about confidence, and right now, confidence is still flimsy. Business owners are worried that the recent uptick in business is just temporary -- and understandably so. Lots of economists still believe that the recovery we've seen so far is largely a "relief rally," as consumers breathed a sigh of relief that we didn't plunge into a second Great Depression.
The next six months, therefore, will be critical. Optimists believe that by the first quarter of 2010, the economy will start to show real organic growth (ex stimulus spending). If so, this will likely lead to a gradual increase in confidence -- and, with it, a boost in hiring plans.
Additional reporting by Rory Maher.