SHRM/Rutgers LINE® Index Forecasts Soft Labor Market for July 2008
Alexandria, Va. ─ Human resource professionals from around the country report that hiring in the manufacturing and service sectors will decline sharply in July 2008, compared with one year ago.
Their responses are summarized in the latest numbers from the SHRM/Rutgers Leading Indicators of National Employment® (LINE®).
The report also found that the rate of compensation growth decreased modestly within the manufacturing sector, but within the much larger service sector, it rose slightly from the June 2007 pace.
“HR professionals addressing immediate trends report that the job slowdown will likely continue into July,” said Jennifer Schramm, SHRM manager of workplace trends and forecasting. “This is an indication that far fewer new hires will be made next month compared to this time last year.”
“The promising news is that the forecast indicate employers across sectors are having an easier time finding highly qualified new workers,” said Schramm. “The recruiting difficulty index dropped sharply from the June 2007 levels.”
These are the findings of the July 2008 LINE employment report, a set of economic indicators that forecast changes to four national employment measures: job expectations, job vacancies, new-hire compensation and recruitment difficulty.
LINE provides the only published index of new-hire compensation and recruiting difficulty. Additionally, the LINE employment expectations index is an early indication of the monthly Bureau of Labor Statistics (BLS) report, which is released five weeks later. The LINE survey uses a broad sample of firms from the manufacturing and private service sectors. Those two sectors make up more than 90 percent of America’s private sector employment.
The LINE index of manufacturing employment expectations dropped 17.9 points compared with July 2007. This index declined from 48.8 in July 2007 to 30.9 in July 2008.
Employers reported a marginally lower vacancy rate index among exempt manufacturing jobs for June, the month leading into the July forecast — 14.0 during June 2007 compared with 12.3 in June 2008.
The June 2008 vacancy rate index of nonexempt manufacturing jobs is lower than it was in June 2007 — 11.1 compared with 17.4.
The June 2008 LINE recruiting difficulty index plunged from June 2007 — 23.1 in June 2007 compared with 1.4 in June 2008.
Compensation fell slightly for new hires in the manufacturing sector. The manufacturing new-hire compensation index for June 2007 was 8.2, compared with 7.9 in June 2008.
In the service sector, the LINE index of employment expectations dropped 14.2 points from July 2007 to July 2008 (52.7 compared with 38.5). In July 2007, private service-sector employment rose by 114,000 jobs on a seasonally adjusted basis and dropped by 135,000 jobs on a not seasonally adjusted basis.
The service-sector exempt employment vacancy index rose substantially from 3.2 in June 2007 to 17.8 in June 2008. A look at the nonexempt employment vacancy index also shows a dramatic increase, from -11.9 in June 2007 to 12.3 in June 2008.
The recruiting difficulty index fell sharply — 24.2 in June 2007 compared with -4.3 in June 2008.
The new-hire compensation index rose from a year ago — 8.9 in June 2007 to 10.8 in June 2008.
The SHRM/Rutgers LINE indicator of employment expectations provides an early snapshot of anticipated U.S. hiring for the same July time period as the report the BLS will release in August. The monthly report forecasts changes in national employment by surveying human resource professionals at more than 500 manufacturing and 500 service sector firms. Responses in the LINE survey are weighted using the proportion of total employment represented by the respondent’s industry.
The LINE report is a collaborative effort between the Society for Human Resource Management (SHRM) and the Rutgers University School of Management and Labor Relations. The SHRM/Rutgers LINE report began forecasting manufacturing sector hiring trends four years ago and service sector three years ago.
The figure below shows how the LINE employment index, in red, has correlated with the BLS numbers, which are released five weeks later. To view the full report, visit www.shrm.org/LINE.
About the Society for Human Resource Management
The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. The Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 235,000 members in over 130 countries, and more than 575 affiliated chapters. Visit www.shrm.org.
School of Management and Labor Relations at Rutgers
The School of Management and Labor Relations at Rutgers, the State University of New Jersey, is a leading center of scholarly and applied research on human resource management issues. The school creates and disseminates knowledge that fosters a better understanding of the nature of employment and work in modern society. The Rutgers Master of Human Resource Management degree is one of the top human resource management programs in the nation.