U.S. manufacturers and service-sector companies will add jobs at a lower rate in July 2011 than in July 2010, and HR professionals are still struggling to recruit workers for key positions, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for July 2011.
The LINE Employment Report examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies.
|
Employment Expectations |
Manufacturing |
Service |
|
In July 2011, hiring will decline on an annual basis in both the manufacturing and service sectors. |
-4.5
|
-13.6 |
|
Recruiting Difficulty |
|
|
|
In June 2011, the index for recruiting difficulty rose moderately in both sectors compared with June 2010.
|
+10.1
|
+16.5 |
|
New-Hire Compensation |
|
|
|
The rate of increase for new-hire compensation in June 2011 rose slightly in both sectors compared with June 2010. |
+3.3
|
+5.0 |
Source: SHRM Leading Indicators of National Employment (LINE) www.shrm.org/line.
Hiring Expectations and Recruiting Difficulties
The rate of job creation in July 2011 will decline slightly in manufacturing and fall moderately in services compared with July 2010; meanwhile, recruiting difficulties for key organizational positions continue in both sectors.
In July 2011, payroll growth will slow in manufacturing and services compared with July 2010. The manufacturing hiring index will drop in July 2011 on a year-over-year basis by a net of 4.5 points (i.e., a net of 34.7 percent of responding companies will hire in July 2011 compared with a net of 39.2 percent that added jobs in July 2010). Service-sector hiring will decrease as well in July 2011 by a net of 13.6 points; that is, a net of 41.5 percent of responding companies will add jobs, compared with a net of 55.1 percent that added jobs in July 2010).
The LINE results for July 2011 reveal what may be a temporary setback for the labor market’s recovery, and they are in accord with recent federal government data. The manufacturing sector lost 5,000 jobs in May 2011 after posting strong gains earlier in the year, according to U.S. Labor Department’s Bureau of Labor Statistics (BLS); overall, private-sector employment changed very little in many job categories for May 2011.
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.
In the manufacturing sector, a net total of 15.9 percent of respondents reported increases in exempt vacancies in June 2011 (i.e., 23.8 percent of respondents reported increases, while 7.9 percent reported decreases). This represents a 6.6-point decrease from June 2010. Meanwhile, in the service sector, a net total of 3.7 percent of respondents reported increases in exempt vacancies in June 2011—a 7.9-point decrease from June 2010.
The relatively small annual change in both sectors may be an indicator of payroll stabilization for higher-level, salaried jobs as the economy slowly improves.
In contrast to exempt employment, nonexempt employment typically decreases by a greater percentage during economic downturns and increases by a larger percentage during economic expansions.
A net total of 24.7 percent of manufacturing respondents reported that nonexempt vacancies increased in June 2011, representing a 7.6-point increase from June 2010.
For nonexempt service positions, a net total of 21.1 percent of respondents reported increased vacancies in June 2011 (31.0 percent increased, 9.9 percent decreased)—a marked decrease of 7.2 points from June 2010. There were about 1.06 million job openings combined in the professional and business services and education and health services sectors in April 2011, down from about 1.2 million in March 2011, according to the BLS.
In spite of these more subdued hiring rates, recruiting difficulty continues to rise in both sectors. “This may suggest that even with fewer companies hiring, the types of positions employers are trying to fill require skills and experience that are not abundant in the labor market,” said Jennifer Schramm, GPHR, M.Phil., manager, SHRM workplace trends and forecasting.
New-Hire Compensation
Difficulty filling key positions might be one reason why the new-hire compensation index continues to rise, Schramm noted. Compensation packages for new hires increased in June 2011—the ninth consecutive month that the rate of increase for wages and benefits rose on an annual basis in both sectors.
In the manufacturing sector, a net total of 6.8 percent of respondents reported increasing new-hire compensation in June 2011 (i.e., 7.5 percent of respondents increased their new-hire compensation while 0.7 percent decreased it). That is an increase of 3.3 points from June 2010. In the service sector, a net total of 8.7 percent of companies increased new-hire compensation in June 2011, which represents a 5.0-point increase from June 2010. Overall, most organizations are still keeping new-hire compensation rates flat, however. This is consistent with BLS findings that show that real average hourly earnings changed little between April 2011 and May 2011.
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