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LINE: Sharp Jump Expected in June Service-Sector Hiring

By SHRM Online staff  6/6/2013
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In June the hiring rate will rise in the service sector and fall slightly in manufacturing, compared with a year ago, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for June 2013. 

The LINE Employment Report examines four key areas: employers’ hiring expectations, job vacancies, difficulty in recruiting top-level talent, and new-hire compensation. 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



In June 2013 the hiring rate will decline in manufacturing and increase significantly in the service sector compared with June 2012.




Recruiting Difficulty



In May 2013 recruiting difficulty fell slightly in manufacturing and rose modestly in services compared with May 2012.




New-Hire Compensation



In May the rate of increase for new-hire compensation fell slightly in both sectors compared with a year ago.




Source: SHRM Leading Indicators of National Employment (LINE), 

Employment Expectations

In June, for the 11th consecutive month, the hiring rate will rise in services compared with a year ago; hiring will decrease marginally in the manufacturing sector. 

A net of 42.9 percent of service-sector companies will expand payrolls in June (49.8 percent will hire; 6.9 percent will cut jobs). The service hiring index will rise by 20.5 points compared with 2012 and will reach its highest level since June 2010. 

A net of 37.3 percent of manufacturers will add jobs in June (50.8 percent will hire; 13.5 percent will cut jobs). The sector’s hiring index will drop by 6.5 points in June on a year-over-year basis. 

LINE data compare favorably with data from the U.S. Bureau of Labor Statistics (BLS), which reports that several service industries have posted sizable job gains of late. 

Vacant Exempt, Nonexempt Positions

Job vacancies for salaried and hourly positions rose in both sectors in May 2013, according to June LINE data. 

“Vacancies are up across the board and in both exempt and nonexempt jobs, indicating that employers are either keeping vacancies open longer as they look for the perfect candidate or are beginning to post more jobs,” said Jennifer Schramm, GPHR, SHRM’s manager of workplace trends and forecasting. 

In the manufacturing sector a net total of 20 percent of respondents reported increases in exempt vacancies in May, representing a 2.2-point increase from May 2012. This May was the fifth month in a row that manufacturers reported a four-year high in exempt vacancies. In addition, a net total of 29.7 percent of manufacturing respondents reported that nonexempt vacancies increased in May, representing an 8.4-point increase from May 2012. 

In the service sector a net total of 17.4 percent of respondents reported increases in exempt vacancies in May—a 6.8-point increase from May 2012. For nonexempt service positions, a net total of 17.1 percent of respondents reported more vacancies in May, representing a 4.2-point increase from May 2012. 

Monthly nonexempt openings have not followed a specific trend in 2013 when compared with the previous year. HR professionals in both sectors generally have reported increases in job openings within the month of each 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. 

“June hiring expectations in the private service sector look quite good, rising by more than 20 points compared with June 2012,” said Schramm. “Manufacturing is trending down slightly compared to last year, though, overall, a net of 37.3 percent of manufacturers say they are adding jobs.” 

Recruiting Difficulty

This difference in hiring expectations between the two sectors carries over into the recruiting difficulty index, which is down in manufacturing but up in services, compared with a year ago, said Schramm. LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates for the positions of greatest strategic importance. 

A net of 11.9 percent of manufacturing respondents had more difficulty with recruiting in May, representing a decline of 1.9 points from May 2012. A net of 15.4 percent of service-sector HR professionals had more difficulty recruiting in May, an increase of 7.6 points from a year ago and the highest net level of recruiting difficulty in four years for the month of May. 

Other recent SHRM findings show that many HR professionals are having trouble with talent management and recruitment. A March 2013 SHRM survey revealed that two-thirds (66 percent) of organizations that are currently hiring are having a tough time recruiting, up from 52 percent in 2011. And a November 2012 poll found that 34 percent of respondents said “remaining competitive in the talent marketplace” would be a top challenge during the next 10 years. 

New-Hire Compensation

Although projected June hiring appears favorable, the activity is not having a positive effect on new-hire compensation. In the manufacturing sector a net total of 10 percent of respondents reported increasing new-hire compensation in May, down 2.5 points from May 2012. In the service sector a net total of 7.9 percent of companies increased new-hire compensation in May, representing a 1.9-point decrease from a year ago. 

Overall, the index’s data show that most organizations are still keeping new-hire compensation rates flat. This is consistent with recent BLS findings on real average hourly earnings, which rose just 0.8 percent in April 2013 compared with a year ago. Several other surveys have also projected minimal increases to salary budgets in 2013, most commonly around 2.5 percent to 3 percent. 

During the recession a high unemployment rate and a large pool of job seekers in the market gave many companies the option of holding down wages and benefits for new hires to control costs, Schramm noted. If hiring rates improve significantly, new-hire compensation can be expected to increase, she added. 

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