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Employment Gains for August 2012 Won't Affect Current U.S. Jobless Rate
 

By SHRM Online staff  8/2/2012

Hiring will continue steadily in the manufacturing and service sectors in August—following national labor market trends—according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for August 2012. 

However, recruiting difficulty increased slightly in July 2012 for key jobs in manufacturing and services, compared to July 2011.

The findings for new-hire compensation were mixed in July 2012, rising slightly in the manufacturing sector, and falling modestly in the service sector.

“The good news this month is that the LINE employment expectations index for August 2012 increased compared with a year ago,” said Jennifer Schramm, GPHR, manager of SHRM’s Workplace Trends and Forecasting. “This is noteworthy because it is the first time since April 2011 that the year-over-year comparisons for employment expectations showed an increase in both sectors.”

The LINE Employment report examines four key areas:

Employers’ hiring expectations.

New-hire compensation.

Difficulty in recruiting top-level talent.

Job vacancies.

It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing companies and 500 service-sector companies. The SHRM LINE indices are not seasonally adjusted. 

Employment Expectations

Manufacturing

Service

 

In August 2012, the hiring rate will rise modestly in both sectors compared with August 2011.

 

+5.0

 

 

 

+9.4

Recruiting Difficulty

 

 

 

In July, recruiting difficulty rose slightly in both sectors compared with a year ago. 

 

+1.2

 

 

+4.3

New-Hire Compensation

 

 

 

In July 2012, the rate of increase for new-hire compensation rose in manufacturing and fell in services compared with July 2011.

 

+1.9

 

 

 

-6.1

Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line

Employment Expectations

A net of 40.6 percent of manufacturers will add jobs in August 2012. Specifically, 49 percent will hire and 8.4 percent will eliminate jobs. The sector’s hiring index will rise in August 2012 on a year-over-year basis by a net of 5.0 points.

A net of 28.6 percent of service-sector companies will add jobs in August 2012, meaning 33.8 percent will hire, while 5.2 percent will trim payrolls. The service hiring index will rise by 9.4 points compared with August 2011. The layoff rate will fall in both sectors in August 2012 compared with August 2011.

The LINE results for August 2012 might reflect an ongoing trend of steady job growth each month but they also reveal that hiring is not yet at a strong enough level to bring down the United States’ continuing high unemployment rate.

In eight of the past 12 months, manufacturing hiring has trailed the previous year’s rate, according to LINE data. During that same time period, service-sector hiring fell behind the previous year’s rate in 11 of 12 months.

Vacant Exempt, Nonexempt Positions

Salaried job openings rose moderately in July 2012 in the manufacturing and service sectors compared to July 2011. Vacancies are defined as open positions that employers are working actively to fill. LINE data cover exempt vacancies—primarily salaried positions—as well as nonexempt openings which are mostly hourly positions.

In the manufacturing sector, a net total of 23.1 percent of respondents reported increases in exempt vacancies in July 2012: 30.1 percent reported increases while 7.0 percent reported decreases. This represents a 10.6-point increase from July 2011.

In the service sector, a net total of 10.6 percent of respondents reported increases in exempt vacancies in July 2012 (16.8 percent reported increases, 6.2 percent reported decreases). That is a 9.7-point increase from July 2011.

However, hourly job vacancies fell in manufacturing, but rose in the service sector in July 2012 compared with July 2011.

A net total of 15.1 percent of manufacturing respondents reported that nonexempt vacancies increased in July 2012—27.7 percent increased, 12.6 percent decreased. This represents a 2.5-point decrease from July 2011.

For nonexempt service positions, a net total of 14.4 percent of respondents reported increased vacancies in July 2012—22.3 percent increased, 7.9 percent decreased. This marks a 10.4-point increase from July 2011.

Monthly nonexempt openings have not followed a specific year-over-year trend lately, but HR professionals in the manufacturing and services sectors have generally reported increases in job openings for each monthly LINE survey. For every month since September 2009—shortly after the end of the Great Recession—the manufacturing and service sectors have reported a net increase for nonexempt openings.

Recruiting Difficulty

LINE’s recruiting difficulty index measures how hard it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies. In July 2012, difficulty in recruiting key candidates rose slightly.

“HR professionals in both manufacturing and services also reported a slight year-over-year increase in recruiting difficulty for their jobs of most strategic importance,” Schramm said. “The rise in the employment expectations and recruiting difficulty indices are faint but still positive signs.”

A net of 15.9 percent of manufacturing respondents reported more difficulty with recruiting in July 2012—an increase of 1.2 points from July 2011,  and the highest net of recruiting difficulty in manufacturing in four years in July.

By comparison, a net of 5.1 percent of service-sector HR professionals said they had more difficulty recruiting in July, an increase of 4.3 points from a year ago—also the highest net of recruiting difficulty reported in four years, according to LINE data.

Other recent SHRM findings show that many employers are still having trouble matching the skills of job seekers with open positions. An April 2012 SHRM survey showed that 68 percent of manufacturers who were hiring full-time workers were having difficulty finding qualified candidates for those jobs.

New-Hire Compensation

If hiring rates improve significantly, new-hire compensation can be expected to increase. However, there were no significant gains in new-hire compensation reported in July 2012.

In the manufacturing sector, a net total of 6.5 percent of respondents reported increasing new-hire compensation in July 2012—8.0 percent increased, 1.5 percent decreased. That is a 1.9-point increase from July 2011—the highest net increase in four years for manufacturing in July.

In the service sector, however, LINE data revealed a 6.1-point decrease from July 2011 as a net of 6.2 percent of companies increased new-hire compensation in July 2012 (8.5 percent increased, 2.3 percent decreased).

“New-hire compensation in July 2012 is mixed,” explained Schramm, “Because while the net increase rose slightly in July in manufacturing compared with the same time last year, it fell in services.”

Overall, LINE data show that most organizations are keeping new-hire compensation rates flat. This is consistent with recent Bureau of Labor Statistics findings on real average hourly earnings, which rose just 0.3 percent in June 2012 compared with June 2011. Several private surveys have also shown minimal increases to salary budgets in 2012, most commonly around 3 percent.

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