FedEx (FDX) is getting inundated with job applications in what continues to be a hot U.S. labor market characterized by increased job switchers.
“Just the last week, we had 111,000 applications for FedEx. That’s the highest in our history,” said FedEx COO Raj Subramanian on an earnings call Thursday evening. “To put that in context versus what we say in May, that was 52,000.”
The flood of applications isn’t a surprise as FedEx earlier in the year lifted hourly wages for package handlers to $20 an hour. It has also doled out referral bonuses to employees who secure a new hire as the company looks to staff up to meet surging e-commerce demand during the pandemic.
Moreover, the labor market remains tight as to encourage job switching.
November non-farm payrolls increased by 210,000, the Labor Department said earlier this month. Job gains were notched in the professional and business services, transportation and warehousing, construction, and manufacturing sectors. Employment for September and October were upwardly revised by 82,000.
“I think by the end of the year [2022] we could see the unemployment rate around 3%,” said Michael Feroli, J.P. Morgan chief U.S. economist, on Yahoo Finance Live. “It’s stunning to see how much the rate has fallen in the last five months. We expect that pace of decline to slow, but it doesn’t take much to get below 4%. Even with a tick up in the labor participation rate which has been depressed over the last year and a half.”
As for FedEx, the increased pace of hiring allowed it to drive better than expected quarterly earnings.
The company’s second fiscal quarter earnings came in at $4.83 a share versus estimates for $4.26 a share. Revenue rose 14% from a year ago to $23.5 billion. Analysts had expected sales of $22.39 billion.
For its current fiscal year, FedEx sees earnings of $20.50 to $21.50 a share compared to estimates for $19.69.
Added Subramanian, “The first and most important point is the demand for our services is very robust. The pricing environment is very robust. The labor headwinds start to recede in the second half. The investments that we have made to get more efficient as we go into the second half and the technology investments that make us more efficient as well. So, we expect in the second half, our profit and operating margins to improve year-over-year and we get double-digit [percentage].”