Scary Monster

The Monster Employment Index (which tracks online help wanted advertising) came out today, and it’s not pretty (not one of those cuddly Sesame Street monsters). The index dropped from 171 to 165 between June and July. According to the report, there was “similar seasonal retraction observed in July 2005 and July 2004,” but the similarity was clearly only in the direction and not in the size. In July 2004, the index dropped by 1 point; in July 2005, by 2 points; in July 2006, by 6 points. In fact this was, by a margin of 2 points, the biggest one month drop in the 33-month history of the index. It’s also the first year that the index was lower (by 2 points) in July than it was in May.

In and of itself, this observation wouldn’t be particularly worrisome, since the index has had a nice run up and perhaps deserves a rest, but I was hoping for some good news about online advertising, to offset the distinctly bad news we’ve had about print advertising. The Conference Board’s Help Wanted Index dropped from 39 to 33 between February and May and remained at 33 in June. (The July index won’t be released until the end of this month.) The Monster index rose from 157 to 171 over that same period, which was a hopeful sign for those who want to believe that the US is not headed into a recession.

But with Monster back at 165, the situation is looking ugly. The net 8 point increase between February and July compares with 12 point increases for the same period in each of 2004 and 2005. Government data suggest that a substantial net increase in job openings is normal between February and July, but even if we ignore seasonal factors and credit the full 8 points, this doesn’t begin to make up for the drop in print advertising. This is a 5% increase in online advertising vs. a 15% drop in print advertising, while print advertising still has about 70% market share. You do the math.