Corporate America could be starting to feel the negative effects of the massive job cuts made during this recession. Surveyed employers in the manufacturing and services sectors report that hiring in February 2010 will rise above that of February 2009 levels, according to the latest Society for Human Resource Management (SHRM) Leading Indicators of National Employment (LINE) survey, released Feb. 5, 2010.
The LINE Employment survey examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. Results are based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies. Together, these two sectors employ more than 90 percent of the nation’s private-sector workers.
Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line.
Employment Expectations Growing—Slowly
While many economists expect unemployment to remain high for the next several months, job seekers should have better prospects in February 2010 compared to February 2009. Hiring in the manufacturing sector improved by a net of 60.4 points (i.e., a net of 30.3 percent of companies will hire in February 2010, compared with 30.1 percent that conducted layoffs in 2009). The service-sector hiring index rose by a net of 19.5 points in February 2010 (i.e., a net of 23.5 percent will add jobs in February, compared with a net of 4.0 percent that conducted hiring in 2009).
February 2010 marks the eighth straight month that hiring will outpace layoffs in manufacturing (42.8 percent will hire, 12.5 percent will eliminate jobs), and it is the tenth straight month this has occurred in the service sector (35.0 percent will add jobs, 11.5 percent will cut jobs). It is the fourth straight month that hiring has improved on an annual basis in both sectors.
Recruiting Difficulty Increases in January
LINE’s recruiting difficulty index measures how difficult it is for companies to recruit candidates to fill the positions of greatest strategic importance to their organization. Responding employers said the level of difficulty in finding top-tier talent will increase in February 2010 for both sectors compared to February 2009.
For the 11th consecutive month in January 2010, this index recorded single-digit response levels for those reporting increased difficulty with recruiting. In the manufacturing sector, a net of 6.0 percent of companies reported less difficulty with recruiting (i.e., 4.8 percent had increased difficulty, 10.8 percent had less difficulty). This still represents a net increase from January 2009, when a net of 19.4 percent reported less difficulty with recruiting.
In the service sector, a net of 12.4 percent of companies reported they had less difficulty recruiting (i.e., 3.2 percent had increased difficulty, 15.6 percent had less difficulty). This was also an increase from January 2009, when a net total of 18.3 percent of companies had less difficulty with finding top talent. The results might indicate that some categories of job seekers are finding work more quickly than they did a year ago.
New-Hire Compensation Remains Flat
The continuing high rate of unemployment and large pool of job seekers in the market has given many companies the option of reducing the wages and benefits they are offering new hires in an effort to control costs.
In the manufacturing sector, a net total of 1.5 percent of respondents said they would increase new-hire compensation in January 2010 (i.e., 2.5 percent increased, 1.0 percent decreased new-hire compensation). That is a small rise of 2.3 points from January 2009 and the first time that the index has increased on an annual basis since September 2008.
In the service sector, a net total of 0.8 percent of companies raised new-hire compensation in January 2010 (i.e., 3.6 percent increased, 2.8 percent decreased new-hire compensation). That is a decline from January 2009, when a net of 10.1 percent of service companies increased new-hire compensation.
“Though the small year-over-year rise in new-hire compensation in manufacturing is the first time this index has increased on an annual basis since September 2008, competition for jobs remains high,” said Jennifer Schramm, SHRM’s manager of workplace trends and forecasting. “This makes it likely that any compensation gains will remain muted.”
Exempt, Nonexempt Position Vacancies Increase
SHRM’s LINE includes data for exempt vacancies, or primarily salaried positions, and nonexempt vacancies, which are mostly hourly employees. Changes in the number of job vacancies can be one of the earliest indicators of a shift in the balance between labor supply and demand. Overall, there were sizeable increases in vacancies for salaried and hourly wage jobs reported by responding employers in January 2010.
In the manufacturing sector, a net total of 8.6 percent of respondents reported increases in exempt vacancies in January 2010 (i.e., 17.4 percent reported increases, 8.8 percent reported decreases). This represents a 28.5 point increase from January 2009 and the sixth consecutive month that exempt vacancies are higher than those of the same month in the previous year.
A net total of 15.6 percent of manufacturing respondents reported that nonexempt vacancies increased in January 2010 (i.e., 26.2 percent increased, 10.6 percent decreased). This represents a 38.6 point increase from January 2009. In accordance with federal data, this suggests that manufacturers are adding jobs slowly and that demand for production is improving gradually. Monthly job losses for manufacturing in the second half of 2009 were about one-fourth as large as those in the first half of 2009, according to the U.S. Bureau of Labor Statistics (BLS).
In the service sector, a net total of 7.7 percent of respondents reported increases in exempt vacancies in January 2010 (i.e., 16.5 percent reported increases, 8.8 percent reported decreases). That is a 19.5-point increase from January 2009 and the sixth consecutive month that exempt vacancies are higher than the previous year.
For nonexempt service positions, a net total of 7.3 percent of responding service-sector employers reported increased vacancies in January 2010 (i.e., 20.5 percent increased, 13.2 percent decreased). This marked a 17.8-point increase from January 2009, when a net total of 10.5 percent of service companies reported decreases in nonexempt vacancies.
Theresa Minton-Eversole is an editor/manager for SHRM. She can be reached at teversole@shrm.org.
